I have a friend who has a part-time job in a retail establishment. She recently shared that, per company policy, if she sees someone shoplifting, she is not supposed to say anything to the person or yell for a manager.
Front-of-the store personnel who might see a customer walking out without paying for something are not supposed to follow the wrongdoers out the door.
This is apparently for the safety of the employees. Who knows what a person who would steal in broad daylight might be packing under a jacket or sweatshirt?
This does not mean store security and law enforcement are not all over this, trying their best to keep theft losses as low as possible. But the store is not going to put their customer-facing employees at risk.
Theft definitely affects bottom line. In the retail business it is called "shrinkage."
Theft, however, is not exclusive to retail. Anyone with a credit or debit card has likely had their card compromised, meaning a bad actor has either stolen your card or has somehow obtained your card number, and made purchases.
Because of banking regulations, your card issuer is almost always responsible for reimbursing those losses. But it's a big hassle going through the claims process. And like the shrinkage that affects stores, these fraud losses have a huge impact on banks' profits.
Having a card or card number stolen has caused some bank customers to stop using them. For them, however, the alternative is to carry cash which, obviously, can't be replaced if lost; or to write checks, which some establishments will no longer even accept. I have not written a check in a grocery store in years, and that used to be the norm for me.
If you go to a big sporting event or an arena concert, it is likely the concession stands will only accept plastic --a debit or credit card.
On the other hand, some smaller merchants have stopped taking plastic because of the charges they have to pay to the issuers and card networks. At my local farmers market, most of the vendors will accept plastic, but they will give you a discount if you pay cash.
What's a shrewd consumer to do? For me, I still use a debit card for everyday purchases, and assume the risk of compromise. It has happened to me a couple of times and it has been a hassle to deal with, but I was reimbursed.
I also have a credit card, but I mostly use it for larger purchases. I know a lot of people who use their credit card almost exclusively and pay off the balance each month. If the card is lost or stolen and there is an unauthorized purchase, the claims process is similar to that of a debit card, but because it is a credit account and your card is not tied to your checking account, you don't put your operating funds at risk.
And I still carry a small amount of cash, which I use at places like the farmers market that either do not take cash or charge extra for using plastic.
Most important, I try to keep my eye on all of it to prevent fraud and theft. But it's not easy.
5 comments:
When I saw the title, I was thinking you were going to discuss how the CEOs of the two largest bit-coin "scams" have been charged with fraud. But you're right. I use a credit card for online purchases and for remote (where I don't see the card run or at pay at the pump or when traveling overseas, which I haven't done recently) and I use debit most elsewhere and like you always try to have some cash on hand.
I think you are taking unnecessary risk Bob.
By using a credit card, they are required by law to refund your lost funds should it be compromised and they do so immediately. They have a liability limit of $50 but it is rarely enforced and isn't tied to when you report it. Debit cards are similar to credit cards only if you report it within 48 hours. After that, your liability rises to $500 and after I think 60 days, there is no liability limits at all other than how much money you have in your account. It can take upwards of 90 days to ever see your stolen money again, less your liability.
Credit cards also provide purchase protection services should you legitimately pay for something and the deal isn't as described. Debit cards don't.
I have had my credit card number stolen many times over the years and I always have the money back in my account within minutes of talking with them on the phone. Then a couple years ago, my debit card number was "stolen", (I only use it to withdraw cash at a local bank ATM), and I was out that money for about two months before I saw it again. I was fortunately that the amount was inconsequential even though it was from an account that had a substantial amount of money in it at the time. But it really opened my eyes.
Instead of getting that debit card replaced, I got an ATM only card. It is different than the debit card because it can only be used to withdraw cash at ATMs. You can't use it like a credit card. I now have a lot more security since that limits a theft to I think $500/day or ATM limits whatever they may be. The one drawback though is that if I'm in a credit card vs discount situation where I can use a debit card or cash, cash is now my only option. Indeed I was in that situation a week ago getting my oil changed and had to pay cash or pay an extra couple bucks by using my credit card.
I am 73 years old. I have never had nor will ever have a debit card. I pay for EVERYTHING on a credit card and pay it off at the end of the month. I get rewards in the form of money added to my grandson’s college 529 account. I have done that for 21 years. The amount is not inconsequential. I have been hacked a couple of times. One phone call and the problem is fixed immediately. They send a form in the mail to sign. End if story.
On the other hand, my daughter has a debit card that as been hacked numerous times. Once within 30 minutes of activating it. She has alerts set up and knows immediately when it happens and has successfully stopped most of these transactions.
I have alerts also on my credit card. As my grandson uses my credit card at college, I am notified immediately of his transactions. Makes my life easier.
I've never had a debit card, always preferring credit. For most things, though, I've always believed "cash is king". Maybe I'm a dinosaur.
I use a debit card for virtually everything. We have one credit card for online purchases. We also have two store cards, both of which we rarely use.
Whenever there is a case of fraud, it has always involved the internet in our case which is why we have a dedicated credit card solely used for online purchases. The credit card has a purposely low credit limit (they keep trying to raise it for us, and we keep calling them back and telling them not to do that.) If that card is compromised, we know right away it is internet involvement.
Local purchases are on the debit card. We were given a credit card from our bank. We keep it locked up. I don't think we have ever used or activated it.
Ed brought up the point of freezing your credit. We did not know you could do that, and after discussion, it makes perfect sense for us.
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