Zero Fraud Liability: What It Is And What You Need To Know

If you’ve recently undergone credit card theft, it can be a harrowing experience to see unauthorized purchases show up on your account. Besides having to deal with canceling credit cards and requesting replacements, losing money is never fun. Luckily, many issuers offer something called zero fraud liability.

A zero fraud liability policy means you won’t be held accountable for those unauthorized purchases. Such a feature can save you much hassle (and money!) long-term. While it isn’t legally required for business credit cards, it’s still a standard inclusion on most popular business-centric cards.

To get the full nitty-gritty on zero fraud liability, read on!

What Is Zero Fraud Liability?

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Zero fraud liability protects you against fraud in case your card gets lost or stolen and is then used without your consent. In most cases, the liability policy covers unauthorized purchases made online and in-person. The “zero” part means that you are protected against any amount a fraudster spends on your card; in some cases, you may have $50 fraud liability, which means you’ll still be on the hook for up to $50.

Almost all issuers offer some form of fraud liability. However, only consumer cards are required to do so by federal law. Corporate or business cards are not required to offer fraud liability.

It’s also worth noting that if your card network (like Visa or Mastercard) offers zero fraud liability, you’ll be automatically covered. You won’t need to go through extra hoops to sign up, as you might with a rewards program.

How Zero Fraud Liability Works

When you launch a fraud investigation, your card network should cancel all unauthorized charges immediately. Because you’re protected by a zero liability policy, you won’t be held liable for any of the payments.

How to actually go about a fraud investigation varies from network to network. American Express, Discover, and Visa handle all cases and want you to come to them first. Mastercard, however, requires that users first contact merchants and request that the charges be canceled before reaching out.

Technically, issuers have 10 days to investigate fraud. In some cases, it may take even longer. This means that you won’t always have immediate access to money that’s been fraudulently used. However, most major issuers and networks provide next-day access to funds.

You’ll be able to catch fraudulent charges by monitoring your credit card statement, or by checking your activity digitally via an online portal or smartphone app. It might be a good idea to get into the habit of checking your activity on a weekly basis—that way you can catch fraud before it gets out of hand.

Some issuers also offer fraud monitoring services. These services will check to see if a purchase falls outside your usual buying habits, or perhaps monitor risky websites for your information. If your card’s network offers such a service, you can sign up to get text alerts, email notifications, or phone calls when they spot questionable activity.

When Does Zero Fraud Liability Apply?

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If your card is physically stolen and used by the thief, you won’t be responsible for any of their purchases. Similarly, if your card is stolen online (say, in a data breach or hacked database), you’ll also be covered.

In many cases, you won’t be able to receive coverage for PIN-based debit transactions (this is true for all Mastercards and Visa cards). This is because fraud liability policies usually only cover signature-based transactions. On top of this, most zero liability policies only apply to U.S.-issued cards.

Additionally, you may not be able to get your money back through your card’s fraud coverage if a disgruntled employee goes on a spending spree with their employee card. Because employees to whom you’ve given cards are technically authorized users, their activity may not count as fraud in the eyes of your card’s issuer or network. As such, you’re liable for purchases employees make with their company-issued credit cards.

How To Tell If Your Credit Card Has Zero Fraud Liability

There are a couple of ways to find out if your card is covered by a zero fraud liability policy. To start, you can call the number on the back of your credit card and ask if your card is covered. Most issuers also provide the necessary information on their website.

Besides reaching out to your issuer, if you know your card features Visa Business Benefits, is a Mastercard, or is issued by Discover, you likely have a zero liability policy because it is a standard feature for those networks. Of course, you’ll still want to double check because exact benefits can vary from card to card.

Additionally, while consumer or personal credit cards may not always have zero fraud liability, if your card is one of the consumer variety, you’ll have some form of fraud liability. At minimum, this policy will cover anything a thief spends over $50, as mandated by federal law.

Final Thoughts

Ultimately, zero fraud liability protects you against a thief putting charges on your credit card. This feature means you won’t lose money if your card is used fraudulently. Thankfully, it’s a fairly standard inclusion across the gamut of business credit cards, even though it isn’t required by federal law.

Curious about finding the top credit cards? Check out our list of the best cards for your business. If you want to know more about credit cards, learn about the difference between APR and interest rates.

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