Credit card safety and security has been top of mind for many people the past few weeks because of two announcements:
- In November, the startup Coin announced a thin digital device that promises to consolidate all your credit cards into a single swipeable device. I excitedly pre-ordered one.
- Last month Target announced that up to 40 million credit card numbers were stolen by hackers.
There’s been much written about these events, including a lot of misinformation and fear mongering. The press is trying to scare consumers into thinking they are at risk if something goes wrong. Even the New York Times is spreading false fear:
When you buy it, you are agreeing to terms of service that give you no protection. Should something go wrong…it’s not Coin’s problem.
Lets get the facts straight:
- Your credit card number is not a secret. You hand over your credit card to merchants every day, who often take the card out of your sight. There’s plenty of opportunity for someone to steal your credit card number. Get over it.
- Under federal law, you aren’t liable for a single dime if there are fraudulent charges on your credit card. Liability falls on the issuer of the card; it’s built into their models. Let them worry about fraud, they are the experts.
- You don’t need to replace your card after the Target leak. Someone smart already did the math and decided that the cost of replacing 40 million credit cards is more than the cost of their potential liability. That’s why you didn’t get a new card in the mail.
There are powerful computers constantly looking for irregular behavior and fraud every time a credit card is used. Banks do this because they lose money when fraud happens.
Credit card companies have tried introducing “safety” features like putting your photo on the card, or creating one time use numbers for online purchases. There’s even a startup claiming they will “make credit card fraud a think of the past”. Ultimately these features help the banks reduce their risks and their costs. They don’t affect consumers.
My advice: Always check your card statement before paying. Most bad charges aren’t from fraud, but from merchants that make mistakes. Go through your statement line by line before you pay it. It’s worth it.
Other than that, stop worrying about it. You’re safe.
Update: This applies to *credit cards* but *not debit cards*. There is increased liability when using a debit card. I’ll write a post tomorrow to outline this.