For some reason, I had thought that our credit card worries were over once we signed a letter disputing the fraudulent charges to our account and replaced the card with a new one. So it was with shock I opened two large envelopes from our bank to discover still more paperwork. Were we going to be on the hook for thousands of dollars we didn’t spend?

Reviewing the Vendor Authorizations and Bills for the Fraudulent Purchases

What was in each bulky envelope was individual packets for each transaction made illegally against our card. Apparently when we refused to pay,  the credit card company asked each company involved to provide proof that we had made a purchase.

Not Every Disputed Charge Turns Out to Be Fraud

I realized as I looked through the billing reports that this is actually a necessary step. It reminded me of a billing mystery we’d faced a few months before. On that bill, there was a charge for about $1.57 payable to an online book seller. It seemed a very unlikely amount. We almost always order enough for “free shipping” so the bill should have been over $25. The listing on our monthly statement just listed the name of the vendor and a toll free number. It didn’t state what item or items had been purchased.

Luckily, saving probable embarrassment, before I took it any further the light bulb went off in my head. We had placed an order for one of our children. Most of the order had been paid for with a gift card they received from a birthday. The balance, $1.57, had to be paid for directly by credit card.

That’s an example of why the credit card company wants us to review the transaction details. What if we denied a charge by accident due to faulty memories or some mix-up about the name of a company? By reading the detailed transaction history we would have known what books were ordered for “$1.57.” Similarly, we might look through these bills and realize the name a company bills under differs from the name of the company’s website.

Causes Minor Panic

The forms requested us to review the transaction details and if we still denied making the purchases we needed to sign them and send them back. If we didn’t return the signed forms by a deadline, we were deemed to have accepted the charges as valid and they would appear on our next bill.

The panic came from the deadline. The forms were printed by the bank on June 19 but we didn’t receive them until Thursday June 27. And we had to return them by July 3. Yes, that’s right, Canada Day weekend stood between the day we got them and when they had to be back.

A phone call to the bank was somewhat calming. They said they could be faxed back from any bank branch. They also said that they usually give a bit of grace period despite what the letter said. In fact, judging by the tone of the person I spoke with, I think these types of disputes must be very common and these types of mail delays must not be unusual.

Faxed Back and Now We Wait Again

So we have faxed back our forms. Now we wait again. We’re waiting for the vendor forms for the other 1/3 of our disputed charges. They are likely still in the mail.

Will it all end well? I certainly hope so. It’s almost enough to make me stop using a credit card entirely.

Who Really Pays for Credit Card Fraud

I felt rather sick realizing how many small businesses were going to lose because of this fraud. They mailed their merchandise off to the customer in good faith. Now they have no way to get back those Apple TVs and iPod kits. Yet they have no way to get paid for them either. That’s got to hurt.

And, of course, eventually it is all of us who will be paying for this fraud. Those businesses will have to raise their prices to real customers to cover their losses. Or they will go bankrupt which will reduce price competition and again lead to higher prices.

I hope they catch the perpetrators of this crime and jail them. They have robbed from all of us and they should be the ones who have to pay for it.

Related Reading

• What Happens When Your Credit Card is Used Illegally and Fraudulently? Part Two
• Limit Your Risk Online Shopping with a Low Limit Credit Card

Join In
Has your card ever been scammed? Did it work out ok? Please share your experiences with a comment.

It seems some days when I’m trying to make a quick run to buy groceries, sun block, socks for my kids and fill up the gas tank that I’m greeted everywhere by the same questions “Hi! Do you have our credit card? No?! Why not apply now and get free groceries/drugstore rewards points/10% off your purchase/two cents a litre discount.” It seems like everyone wants me to get a new credit card. Why?

Employees Often Have Quotas for Credit Card Applications

My first suspicion was that employees are getting judged based on whether they can sign up new customers for the store’s current credit card. They likely have a quota of new applications they must try to find. So if they get 5 people to sign up for the card this month, they look good to their boss, and maybe they even get a small reward.

So I asked a clerk at a major retail store. Yes, she agreed, they are supposed to get a certain number of applications per month. While at her store the employee would not get fired if they didn’t get the applications everyone knew that getting them was a good thing promotion-wise.

That wasn’t the significant reason, though. She was honest and admitted to a second incentive:

Kickbacks (Or Cash Bonuses) for New Credit Card Applications

The stronger incentive for some employees to push company credit cards is a specific financial reward. At some stores, the person who talks a customer into applying for the new credit card personally earns cash. The “sign up” bonus can be significant: from $25-150 per application!

(It’s important to know that not all employees get a cash reward if you sign up for a card. Sometimes they are pushing the card just to keep their job.)

Some sales people will even tell you that if you apply, they will get some cash, and ask you to help them out by applying. Sounds harmless, right. But should you?

So I Can Help the Cashier by Signing Up, Should I Go For It?

What can go wrong by applying for a bunch of cards you don’t want or need just to help someone out?

First, each time you apply for a credit card, there is the potential for a mark to be added to your credit rating that reduces your rating. It doesn’t have to be applied. It isn’t always applied. But there is a chance. Applying for one unnecessary card obviously isn’t going to be a big deal. But applying for a dozen unnecessary cards isn’t a great idea.

Second, each time you apply for credit you are increasing your chance of a financial identity theft. Again, it isn’t a large risk, but it is a risk. Watch what happens when you provide all that personal info for the card. Do they just stick the papers beside the cash register? Do they just slide them into the register? When will they get sealed up so no one can easily copy them? Where will they be sent and when and how many hands will they pass through on the way? The risk varies but if you don’t really want the card why take any risk?

Third, if you don’t cancel the card you have increased your overall borrowing limit. Say you are approved for 10 cards each with a $500 limit. That’s $5000 of new credit available to you. This can sometimes be a factor when you need a loan or a mortgage. Some lenders will look at all of the sources of credit you have available and assume that you are at the limit on each of them. They then use that liability as part of their calculations of how much you can afford to pay a month on a new loan or mortgage. This calculation is not always done but it was done to us in the past when we applied for a mortgage with a big bank. It was sobering to realize that just having a lot of credit, even if we weren’t using it, could cause problems with a big loan. Why add credit you don’t need or want to your file?

Fourth, the temptation to mis-use your credit increases. The more cards you have, the more likely it is that you will forget to make a payment one month or that you will spend a little more than you planned because the card is right there unused. Again, this is not a major problem for most people but judging by shows like Till Debt Do Us Part it is a significant problem for some people.  Gail Vaz-Oxlade wouldn’t have to tell people to cut up all of their credit cards but one if they didn’t have many, many cards.

Just Say No to New Credit Cards

The fastest simplest way to handle these offers for new credit cards is to just say no. If you have trouble saying no, you can even lie and say you have one already but left it at home. No matter how many incentives they offer, no is still the best answer.

No Credit Card Rewards for Me, Alas

Some of you may have noticed I don’t run ads personally for credit cards on this site. Unfortunately, that means I’m not getting any of those lovely cheques for $125 for convincing someone to sign up for a new card. I’d love the cash but I wouldn’t encourage anyone in my family to apply for a new card, so I don’t feel comfortable recommending my readers apply either.

Sometimes my context-based advertisers (like Google AdSense) may run ads for credit cards. I don’t get paid anything from the credit card company if you apply after reading one of those ads. If I’m lucky, I might get a few cents if you click on the ad, though. I don’t  control whether AdSense runs those ads or instead runs ads for debt consolidation businesses or penny stocks, nor do I know what ads AdSense is presenting on your screen. The ads vary for each reader.

Related Reading

• What Happens When Your Credit Card is Used Illegally and Fraudulently?
• Reduce Your Risk Online Shopping with a Low Limit Credit Card

Join In
Do you get tired of always getting asked to get another credit card? Do you bother having more than one credit card and one low-limit card to use online? Please share your preferences with a comment.