Talking to kids about card fraud

Parents everywhere say to their kids, “Take care of your money. You don’t want to lose it.” For me that was long ago when I was a young girl with a few coins jangling in my pocket. Now that I carry very little cash, taking care of my money requires a keyboard, online access and logging into my various financial accounts.

In today’s world, where much of our money exists as a number, are we taking good care of it? As we casually toss credit, debit, money, and gift cards, in our pocket or purse, do we know what happens if we lose any of them? Do we know what to do if someone makes fraudulent charges?

Those convenient cards we swipe so easily can also create financial havoc when lost or used fraudulently. Each card has a different set of rules. The information is there in the fine print. Consumers are responsible for knowing the rules and procedures.

Let’s review the various ways we can spend money and what happens when something goes awry. Think about how you will talk about these with your kids.

Cash, gift cards and preloaded cards

We know that helpless feeling when we lose cash. When the money is gone there is no one you can call to help you get it back. The only good news is that once the cash is lost, there are no lingering effects or extra cost to you.

Gift cards and preloaded cards are, in practice, the same as cash. There is no recourse for getting them back. There is no electronic security like a pin number. Whoever takes or finds these cards can spend them the same as cash.

Your kids may have already lost some cash, but have you explained that gift cards are just like cash?

Debit and money cards
In many ways, we treat debit cards as cash. Depending on the type of card we may or may not be required to enter a pin number. In any case, money is subtracted at the time of purchase.

More importantly, with these cards you are liable for fraudulent charges within certain time frames. Many cards provide a $50 limit if the charge is reported within two days. Within 60 days you may be liable for up to $500 in fraudulent charges. After that time there may be no limit at all on your liability for the charges.

Do you know what your limits are for your debit and money cards? Can you explain it to your kids?

Credit cards
In many ways, we treat debit I can relay from experience what happens if someone uses a credit card fraudulently. Because I keep all receipts and regularly download transactions to my Quicken account, I can quickly see any irregularities. When I spotted a suspicious charge, I immediately called the credit card company.

When I was transferred to the fraud department they found several more fraudulent charges in the process of being posted. After reassuring me that I’m not liable for any of these charges, they closed the account, and will issue new cards promptly.

In the meantime I called the companies that charge automatic payments to my account. With a few phone calls a crisis is averted. My only inconvenience is being without that card until a new one arrives in the next week or so.

This has happened to us more than once, each time through no apparent action or inaction on our part. Even though we’ve had to close accounts several times we continue to use our credit cards and monitor them regularly because the credit card companies promptly resolve the problem.

In our situation the fraud department could not pinpoint why the charges occurred. They suspect some type of suspicious online activity, which is why they immediately close the account in question.  In each instance the credit card personnel were most helpful, courteous and handled the situation professionally.

We’ve also followed their advice to call our credit card companies before we travel. This serves two purposes. One is to let them know that we’ll be making charges outside our normal geographic area. The other reason is to alert them to watch for possible fraudulent charges during our travels.

It’s reassuring to know that our credit card accounts are being monitored for fraud. One company did call us during a trip to report a questionable charge, a situation easily resolved over the phone.

In the grand scheme of using cards for purchases, in my experience, credit cards offer the most protection. In each case I was not liable for the fraudulent purchases. Also, most credit card companies allow several months to dispute charges, another protection against fraudulent, inaccurate charges or undelivered merchandise. Many also offer extended warranty and replacement for lost or damaged items.

Do you know the procedures for your credit cards? Can you explain to kids how to report problems?

Today’s kids will be using these non-cash spending methods, often on mobile devices. Just as managing money as a number requires different monitoring on our part, we also need to start teaching our kids early. We need to say to them, “Take care of your money.”

In today’s cashless world taking care of money takes more effort than it used to. Now is the time to start the conversation with your kids about how to monitor invisible money that electronically zips around the world.

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