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About the Federal Reserve
The Federal Reserve Bank of
Philadelphia is one of 12 regional
Reserve Banks in the United States that,
along with the Board of Governors in
Washington, D.C., make up the Federal
Reserve System, the nation’s central bank. To ensure a sound
financial system and a healthy economy, the Fed conducts
monetary policy, supervises and regulates financial institutions,
maintains the payments system, and serves as the lender of last
resort in a financial crisis.
The Philadelphia Fed is responsible for the Third District,
which covers eastern Pennsylvania, southern New Jersey,
and Delaware. Like other Reserve Banks, the Philadelphia
Fed is involved in conducting monetary policy, supervising and
regulating banks, and providing financial services to banks and
the federal government.
The Board of Governors, which is accountable to Congress,
oversees the Reserve Banks. Fed Governors and Reserve
Bank presidents participate in Federal Open Market Committee
decisions on national monetary policy.

Payment Cards Center
The Federal Reserve Bank of Philadelphia established a
Payment Cards Center to provide insights into developments
in consumer credit and payments. The center carries out its
mission through an agenda of research and analysis, as well as
forums and conferences that encourage dialogue incorporating
industry, academic, and public-sector perspectives.

Payment card fraud is the unauthorized use of your cards or card
account numbers for financial gain, often by using them
to purchase goods and services.

Payment Card Fraud
There are many antifraud tools used by
the payment card industry. Among them, artificial neural networks are sophisticated computer
programs that help to identify transactions that may be
fraudulent. One indicator may be transactions that appear to be
out of line with a customer’s past usage, for example, transactions occurring in certain foreign countries where the cardholder
has never before traveled. These out-of-profile transactions may
generate a call from your issuer. Without this notification, victims
of payment card fraud may not be aware of fraudulent activity
until they review their monthly statements.
Likewise, if you suspect fraudulent activity, you should call
your card issuer immediately. (You may also follow up in writing
as an abundance of caution, but be sure you note it as a written
follow-up to an already reported fraud event.) Depending on
the nature of the fraud, a new card number may be issued for
your account and new plastic mailed to you, and the issuer will
decline any authorizations to the former number.
To protect against payment card fraud, know where your
cards are at all times and keep them secure. To protect ATM and
debit cards that involve a personal identification number (PIN),
keep your PIN a secret. Don’t use your address, birth date, or
phone or Social Security number as the PIN, and do memorize
the number. Following are some additional dos and don’ts for
preventing payment card fraud.


1. Sign your payment cards as soon as they arrive. This enables
the merchant to compare your signature at checkout with the
one on the card. It further validates that you are the true account holder.
2. Carry only those cards you need. Keep them separate from
your wallet, in a zippered compartment, business card holder,
or small pouch. Keep others secured in a locked safe at home
or in a safe deposit box to avoid “friendly fraud,” a form of
theft committed by people who know their victims and can
gain access to their account information.
3. Keep a record — in a safe place, separate from your cards
— of your account numbers, their expiration dates, and the
phone number and address of the card-issuing bank so you can
quickly report the loss of your card or fraudulent transactions.
4. Keep an eye on your card during transactions and get it back
as quickly as possible. This reduces the risk of your card or
card number being copied without your knowledge.
5. Save your credit card receipts to compare against your monthly
statements. Also, if you have any reason to dispute a transaction, having the credit card draft will expedite the process.
6. Shred or cut up old cards — cutting through the account
number — before disposing. Also, shred all mail solicitations
for payment cards before discarding. Inform the issuer of any
cards you wish to cancel. Don’t assume that just because
the plastic card is destroyed, no risk remains. Fraud can be
conducted using only information related to an account without
having physical possession of the plastic card. Only the issuer
can close the account. Some issuers may send you a confirmation, via mail or e-mail, when your account is closed. When
you close your account, ask your issuer about procedures.


Sign your payment cards as soon as they
arrive. This enables the merchant to compare
your signature at checkout with
the one on the card.

7. If you receive statements by mail, open them promptly
and immediately reconcile them with your receipts. Using
your issuer’s website, you may monitor your account more
frequently. Whether you notice a questionable transaction
online or on a paper bill, notify your issuer immediately.
8. Notify your card companies when you have a change of address. If you receive a change of address confirmation and
you made no such request, contact your issuer immediately.
9. Check ATM or debit card transactions carefully before you
enter the PIN or sign the receipt; funds will be quickly transferred from your checking or other deposit account.
10. Call your credit card issuer immediately if you do not receive
your monthly account statement as expected. Undelivered
statements may indicate a thief has taken over your account
and changed the billing address.
11. Make sure you’re using a secure site when making payments
over the Internet. Look for a lock icon in the status bar of your
web browser; this icon indicates that a site is employing an
encryption technology when transmitting sensitive data.
12. Periodically change the PIN on your debit and ATM cards.
13. Contact your card issuer in response to letters or phone
messages from them. Federal regulations restrict the amount
of information that banks can include in their communications to their customers. Don’t assume the return call can
wait; contact your bank as soon as possible. To ensure you
are calling your issuer, and not someone posing as such,
call the number on the back of your card or from your billing
statement rather than one left in a message.


1. Leave your cards unattended anywhere.
2. Leave your payment cards in your vehicle. A very high proportion of payment cards are stolen from motor vehicles.
3. Lend your cards to anyone.
4. Sign a blank receipt. When you sign a receipt, draw a line
through any blank spaces above the total.
5. Write your account number or PIN on a postcard or on the
outside of an envelope.
6. Give out your account number over the phone unless you’re
calling a company you know is reputable. If you have questions about a company, check it out with your local consumer
protection office or Better Business Bureau.
7. Carry your PIN in your wallet or purse or write it on your ATM
or debit card.
8. Reveal financial or personal information unless you have
initiated the contact. Remember, thieves may pose as
representatives of banks, Internet service providers, and
government agencies as a way to get you to divulge personal or financial data that can be used to commit payment
card fraud. These types of scams, such as “pretexting” and
“phishing,” can be perpetrated in person, over the phone, on
the Internet, and through e-mail.

If You Are a Victim
If you do become a victim of credit card fraud, your maximum liability under federal law for unauthorized use of your
credit card is $50 per card. If you report a card lost or stolen before any fraudulent misuse is attempted, the card issuer cannot
hold you responsible for any misuse.

When you receive new credit cards,
shred old cards before disposing.

For debit cards, liability protection depends on whether
the plastic card itself is stolen and used fraudulently. If it is, a
time element is added to the protection: If unauthorized activity is reported within two business days, the liability limit is $50.
If unauthorized activity is reported within 60 days, the liability
limit is $500. If the fraud is reported more than 60 days after the
customer received the statement showing the fraudulent activity,
the customer’s liability may be unlimited on transfers made after
the 60-day period. When thieves steal just the account number
and use it either on its own or to produce a counterfeit plastic
card, customers have zero liability for 60 days from receipt of
the statement on which the fraudulent activity is reported and
unlimited liability thereafter. For this reason, it is critical to regularly monitor these accounts and the associated statements for
unauthorized use and to quickly notify your issuer.
Card issuers often provide greater protections from fraud
than are required by law. Therefore, it is important to check with
your issuer to confirm its policies regarding consumer liability
limits for payment fraud.

For more information on how to protect yourself from
payment card fraud or to report an instance of fraud, go to the
Federal Trade Commission’s website:
articles/0213-lost-or-stolen-credit-atm-and-debit-cards. The
FTC’s site also contains information about other consumerrelated issues.
To obtain a free copy of your credit report from one or all
three of the national credit bureaus, visit www.annualcreditreport.
com or call 1-877-322-8228. To request your report(s) through
the mail, visit
action, download the form, print it, fill it out, and then mail it to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281


For More Information
The Federal Reserve Bank of Philadelphia has other
brochures on credit topics.
To obtain copies of these brochures, or for additional copies
of this one, please contact:

Federal Reserve Bank of Philadelphia
Public Affairs – Publications
P.O. Box 66
Philadelphia, PA 19105-0066



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