Picture this: You’re on vacation watching the waves roll in from blue water over sugar-white sand, sipping a delicious tropical umbrella drink, listening to music and laughing with your friends.

Meanwhile, over at your rental car parked in the beach lot, a thief breaks the car window in a smash-n-grab and steals your wallet. Within an hour, the thief has charged your credit cards to the tune of thousands of dollars of credit card theft.

After you’ve discovered this invasion of your peace and property and reported it to the local police, will the police actually investigate this credit card theft?

Due to the difficulty of investigating these claims and the protections afforded cardholders, credit card theft investigations rarely occur.  Most credit card companies have zero-fraud liability contracts with their customers, and federal protection caps the cardholder at $50 for timely-reported credit card fraud (usually within 48 hours). In other situations, the credit card company passes the fraud onto the merchant.

How Do Police Investigate Credit Card Theft?

When it comes to identity theft, credit card theft is the most common type.

In those rare situations where the police do investigate credit card theft, it’s usually because there has been multiple thefts in one area or a single perpetrator targeting certain individuals. For the most part, credit card theft is often not reported, and at the first sign of fraud, credit card holders usually cancel their cards.

As with any other investigation, the police will ask the card holder questions. Credit card transactions are easy to track, which is why thieves charge as much as possible in a short amount of time so they can sell it once they’ve maxed out or discarded the card.

Police will also visit the stores where the charges were made and ask questions, as well as examine any available surveillance video or photo evidence.

Sometimes there is a local crime ring or repeat offender who gets caught in a sting operation put on by the police, or simply causes enough of a problem in one jurisdiction to warrant law enforcement to dedicate resources to catching the credit card thief. Many credit card fraud offenders work only online and law enforcement often uses their digital trail to track them down.

In either case, the police will attempt to use any evidence obtained to narrow down their investigation to a list of potential credit card theft suspects. If they are fortunate enough to track one down (or catch them in another crime and connect them to the credit card fraud) the offender could be charged, tried, and convicted of the credit card theft.

Who Pays When a Credit Card is Used Fraudulently?

This is a great question, and the easy answer is that it’s usually not the credit card holder.

That is to say, not directly. Ultimately, credit card theft is a problem each year to the tune of several hundred million dollars, which is another reason the police simply cannot investigate them all. And unfortunately, the loss felt by merchants is ultimately passed onto consumers in the form of higher retail prices to offset the lost profits.

As mentioned above, the Fair Credit Billing Act (FCBA) limits a cardholder’s maximum liability to $50 for fraudulent or unauthorized charges. However, as a nugget to entice consumers to use their particular card, major credit card companies will offer $0 liability to the cardholder for unauthorized charges. If you have one of these cards, this means that the charges the lady thief made on your card while you were sunning on the beach will cost you nothing (check your contract’s rules on reporting theft timely and diligently).

The merchant may be on the hook for the fraudulent or theft-based charges. Why? When the card is actually used (called a “card-present” theft) versus when only the number is used (“card-not-present” theft) the bank is usually responsible. Conversely, merchants often take the hit when the number is used in a card-not-present transaction. The major credit card companies often set the rules for how this liability is handled.

In the end, due to these protections and rules, law enforcement agencies know that the issue of the theft will be handled in a civil manner. Therefore, conducting millions of unsolved investigations is simply not an effective use of resources.

What Should You Do about Credit Card Theft?

First, try and determine if credit card theft has actually happened and if so, when and where it happened. Next, take the necessary steps (call the credit card issuer or bank’s fraud department) to remove the theft-related charges. Then, considering the account (and perhaps your identity) have been compromised, close the credit card account.

Once you’ve done these things, request a new credit card with a new account number. Although it seems very unfair, the three major credit bureaus don’t know if it was you or a credit card thief charging on your card. Thus, it’s prudent to contact each of them to see what else may have been charged or reported, and to dispute any hits to your credit report caused by the thief.

The Fair Credit Billing Act mentioned earlier gives a cardholder up to 60-days from the day they get their credit card bill to argue the charge, which must be over $50. After that, the issuer may take 30-days to recognize the complaint, and upon this they have up to two billing cycles to investigate. The issuer may not report payment on the disputed charge as late, charge interest, or request the cardholder to make a payment on the charge.

The Bottom Line

There you have it. The police rarely investigate credit card theft. But the protections involved for you as the credit card holder should assuage any concerns about the police not being able to follow up.

The credit card thief that almost ruined your vacation really only managed to cause you to cancel one credit card and order another. While this may give you some headaches on your vacation, it’s highly likely that you will not be responsible for the charges.

So relax, enjoy your drink, and listen to the waves roll in.

Geek, out.

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