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  1. #1

    Default Liability of Merchants for Allowing Fraudulent Charges


    I got a call yesterday from my bank asking my wife to verify charges made to her debit card. There was a debit of $284.02 at a Food Maxx in Fairfield, CA. We live nowhere near Fairfield and were in Southern California when this charge was created. The bank has marked the charge as fraudulent and my wife has cancelled her card and obtained another one. We also filed a police report and they said they would review security tapes, etc to try to catch these people. My question is, since this was a point of sale transaction, what liability does the Food Maxx have in this? They should have verified the identity of the card holder, since it was a signature transaction and not a PIN transaction.

    Also, we both still have our cards in our possesion, so how was the information used on a different card?

    Thanks for any info provided.

  2. #2
    Join Date
    Jan 2008

    Lightbulb Re: Liability of Merchants for Allowing Fraudulent Charges

    If you never lost possession of your card then it is possible that the thief had a fake card made. It probably did not even have your wife's name of it - but a fake name with a fake signature on the back that matched the bad person's fake ID. If the card was swiped instead of going thru a 'knuckle buster' then that card also had a counterfeit magnetic strip. When a card is swiped, if the signature on the receipt matches that on the back of the card then there is no reason for the retailer to even check ID. And if the card is knuckle busted and the signatures match the IDs then there is no reason to think the sale is suspicious. The merchant will be charged back by the card issuer if they did not follow protocol - but that has nothing to do with you or your wife.

  3. #3
    Join Date
    Mar 2009
    Key West, FL

    Default Re: Liability of Merchants for Allowing Fraudulent Charges

    For many years credit card companies refused to allow merchants to ask for identification and most still do not. Sometimes if it is over a certain amount, they might ask.

    Your card was cloned. It might have come from a stolen database, but more likely some retail location or restaurant where the card was used had a dishonest employee with a card scanner and the card was scanned and duplicated.

    You have no liability in any of this, just the inconvenience of getting a new card issued.

    You actually were lucky the bank spotted that transaction before your account was emptied out.

    Actually the merchant accepting the card has no liability in regards to you. They have a liability to the bank that issued the card and they will suffer a chargeback when the bank takes the money back out of their account.

  4. #4
    Join Date
    Jan 2008

    Exclamation Re: Liability of Merchants for Allowing Fraudulent Charges

    I also wanted to add that you both should request a free credit report from the top three credit bureaus. You never know what else the bad guys got ahold of...

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