Your rights when disputing fraudulent charges on a business card
By Elaine Pofeldt | Published: May 11, 2015
Your Business Credit
Dear Your Business Credit,
We were issued a fuel credit card and the creditor locked our account because we were getting over our credit limit. When I called, they told me that there had been almost $4,000 put on one of our cards within a four- to five-day period. They also informed me that we are responsible for fraudulent charges. They had us sign a document that basically says if there is any misuse from a current or discharged employee that uses a card, the company will be responsible. However, this card had not been used and was not held by an employee. What are my rights and responsibilities? -- Linda
Sorry to hear you have to deal with this hassle. It's hard enough to run a small business without having to battle with a credit card issuer.
I ran your question past Barbara Meltzer, manager of merchant advisory firm Chargeback Experts in Baltimore. If you, as cardholder, sign paperwork saying you did not make the charges, the issuer generally cannot hold you liable, she said in an email. The paperwork could be in a form from the issuer that you request and complete, or in a letter specifying you did not make the charges.
"There are exceptions for pay-at-the-pump charges," she added. In that case, you could be liable for charges up to $50.
It's not clear from your note how long ago the fraudulent charges took place. Your card issuer has probably set a certain window for issuing a chargeback, such as 120 days. If that window has passed, it could be more difficult to issue a chargeback but it still may be possible to arrange a write-off from the bank. Since the fraudulent charges were substantial you may want to get legal advice from an attorney specializing in credit related matters.
For the benefit of others who may have had a card stolen, I should note that the Fair Credit Billing Act and Electronic Fund Transfer Act offer consumers some protection if their credit, ATM or debit cards are lost or stolen.
According to the Federal Trade Commission's website, "Under the FCBA, your liability for unauthorized use of your credit card tops out at $50. However, if you report the loss before your credit card is used, the FCBA says you are not responsible for any charges you didn't authorize. If your credit card number is stolen, but not the card, you are not liable for unauthorized use."
Consumer cards do come with more protections than business cards but even with business cards, your maximum liability for fraudulent charges should be $50, as I mentioned in an earlier column, "How to dispute fraudulent charges on a business gas card."
One thing that isn't clear to me is how someone got access to the card if no one is using it and it wasn't held by an employee. In your situation, I'd want to get to the bottom of this, so it doesn't happen again. Is the card kept in an insecure location where it could be accessible to someone who is snooping around? Are you shredding monthly statements carefully? If not, it's time to put a plan in place to keep your cards secure. You may ultimately get reimbursed for the fraudulent charges, but in a small business, your time is your currency. You can't afford to spend it unraveling a situation like this.
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