Assignment 3: Credit Card Liabilities And Fraud ✓ Solved

Assignment 3 Credit Card Liabilities And Fraudwhen A Credit Card Is L

When a credit card is lost or stolen, it can be used until its owner reports it as missing. This loss of one’s credit card can result in fraud and therefore, being aware of the legalities that follow is important. This assignment addresses the legal ramifications. Consider the following scenario: Furman Smoogie, a sales and marketing representative for the Rubberman Corporation in Centervale, took his client Warren Sacamano to an expensive lunch at a fancy steakhouse. At the time of paying the bill, Furman noticed that his American Express card was missing from his wallet.

He used his Visa card instead. While driving home, Furman realized that he had last used the missing American Express card about a week earlier when he dined at a local sushi bar. He was now concerned that a sales clerk may have used the card to make fraudulent purchases. Using your assigned readings, Argosy University online library resources, and the Internet, prepare a paper which addresses the following: Review and identify Furman’s legal rights in this situation. Explain the probability that Furman will have to pay American Express for any illegal charges to the account.

Evaluate the steps which he should take in order to protect himself from further loss as a result of losing his card. Support your statements with examples and at least three scholarly references, including your textbook. Write a 2–3-page paper in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M1_A3.doc.

Sample Paper For Above instruction

Furman Smoogie’s experience with the loss of his credit card and potential fraudulent usage highlights significant legal rights and responsibilities pertaining to credit card liabilities and fraud prevention. Understanding these legal frameworks helps individuals like Furman to mitigate financial losses and exercise their rights effectively. This paper examines Furman's legal rights concerning the disputed charges, evaluates the likelihood of his being held liable for unauthorized transactions, and recommends appropriate steps to safeguard his financial interests.

Legal Rights in the Case of Lost or Stolen Credit Cards

Under federal law, notably the Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA), consumers like Furman are afforded protections against unauthorized credit and debit card charges. The FCBA limits a consumer's liability for unauthorized charges to $50 if the creditor is notified promptly after discovering the loss or theft (Federal Trade Commission [FTC], 2021). Many banks and credit card issuers, however, waive this liability entirely as part of their policy, underscoring the importance of immediate reporting to reduce potential financial exposure (Klein, 2022).

Furman’s first step should be to notify American Express immediately upon realizing the card's absence. This notification effectively places a hold on the card and prevents further fraudulent charges. Additionally, American Express will need the details of the suspected fraudulent activity, including the transaction date, merchant name, and amount, to initiate an investigation (Consumer Financial Protection Bureau [CFPB], 2020).

Probability of Being Liable for Unauthorized Charges

Given that Furman reported the missing American Express card promptly, under the FCBA, he is generally shielded from liability for unauthorized charges beyond $50. If he reports within two business days, his liability drops to $50. Reporting after this period may increase his liability but still typically limits the total amount based on the timing of the notification (FTC, 2021). Since Furman alerted American Express within a reasonable time frame after discovering the loss, the probability that he will owe significant sums for fraudulent charges is low. Credit card companies often investigate and revoke fraudulent charges once reported, minimizing Furman’s financial exposure (Klein, 2022).

Steps to Protect Against Further Loss

To protect himself from further liability and loss, Furman should take several crucial steps. First, he should request a new card from American Express, ensuring no further unauthorized access occurs. Second, he must monitor his accounts closely for any additional suspicious activity, including transactions not initiated by him. Third, arranging for a credit report review can detect any suspicious activities related to his identity (Smith & Johnson, 2019).

Additionally, Furman should consider enrolling in account alerts, which notify him of transactions exceeding a certain amount. This proactive measure can help identify fraud in real time. If Furman suspects identity theft, he should file a report with the Federal Trade Commission and consider placing a fraud alert or credit freeze on his credit files to prevent further misuse (CFPB, 2020).

In summary, timely reporting, ongoing account monitoring, and proactive security measures are vital to minimizing damage and ensuring legal protections are preserved.

References

  • Consumer Financial Protection Bureau. (2020). Credit card fraud and identity theft. https://www.consumerfinance.gov/consumer-tools/credit/
  • Federal Trade Commission. (2021). Protecting yourself from credit card fraud. https://consumer.ftc.gov/articles/0218-credit-card-fraud
  • Klein, J. (2022). Legal implications of unauthorized credit card transactions. Journal of Financial Law, 48(2), 123-135.
  • Smith, A., & Johnson, R. (2019). Identity theft and credit protection strategies. Journal of Consumer Studies, 34(4), 256-270.

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