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Customer Gives Little Credit to Store in Charge-Card Fraud

June 21, 1989|DON G. CAMPBELL

Question: I have enclosed a copy of a letter that I sent to the main office of the Broadway department store and which I will summarize:

I have been a good customer of the Broadway for many years and have always paid my bills promptly. In late February, I received my bill showing charges of $959 for women's clothes and shoes that I did not purchase. I called the credit office and was told the mistake would be rectified in a week.

A few weeks later, I was called on a Sunday and asked if this was the residence of So-and-So, a woman. When I told them they were mistaken, they told me that a woman of that name had signed two sales checks at Broadway's Del Amo store. My charge card was not used in the transaction. At that point I assumed that fraud was involved and the amount would be taken off my account until an investigation was launched. I was told that the charges would be "frozen" and I would not have to pay the monthly charges on the amount of the fraud.

I was told that if I signed a "release" paper, the charges would be "credited" to my account. I don't see how the store can "credit" someone's account for something the customer was not responsible for.

The Broadway people also referred to the bill as the "disputed" amount. I was not "disputing" the amount, but denouncing it. After it was determined that I was in no way at fault, all references to these charges should have been removed from the bill immediately.

This whole matter has caused me great mental anguish. I have been more than willing to cooperate with the Broadway in any investigation of my possible personal involvement in this matter. Instead, I have spent two months attempting to expunge this from my record.

After I have heard the Broadway's explanation of how my number came to be used without my card, I will then determine whether to close my account with them. Is the Broadway compelled to give a customer the details of the outcome of a fraud case?--L.L.

Answer: You've been through the mill, all right, and the Broadway regrets that it took as long as it did to clear these charges. The timing was such, apparently, that the clearance missed the first billing cycle, and so it wasn't until May 8, Teri Loud, senior manager of account services for the Broadway, says, that the thing was completed and that a letter of apology went out to you.

Unfortunately, there is a matter of semantics--language--involved here. The law requires that this fraudulent charge of $959 has to be referred to as a "disputed" amount--a fine point that keeps it on neutral ground while the investigation is ongoing.

And using the phrase "credit to" your account is, after all, just another way of saying "wipe it off" your account. At no time during the investigation, Loud adds, were you required to make any payments on the fraudulent purchases, no finance charges were imposed and, of course, you were never shown as being delinquent.

How the sales were made without the use of your charge card is one of those sticky situations that retailers encounter constantly, because a distressing number of shoppers every day walk away from home without their charge cards. Should the stores make the customer go home and retrieve it? From an image standpoint, this would be a little bit like hiccuping at a wake.

"So, we have the clerk call the credit office and try to confirm the account by asking the customer a couple of questions that will establish some identity," Loud adds. "Ask for an address, a telephone number or something like that."

Obviously, as your case so graphically proves, this is a country mile wide of being foolproof.

"When something like this happens," Loud continues, "we dig out the actual sales bills that the person making the purchase signed, ask the customer to examine them and then sign an affidavit of forgery. Then we remove the charge from the customer's bill, set up a new account number and send the customer a letter of apology."

The issuing of a new account number is fairly standard procedure, based on the Broadway's suspicion that if whoever pulled this scam knows enough about you (address, telephone number or what-not) to forge the sales slip in the first place, that person might also know your account number. So it's a double precaution.

"Credit card frauds like this," Loud says, "are at their highest peak right now in about four years--and that seems to be the cycle, about four years. It's unfortunately a normal situation in retailing, and most fraud involves either stolen or counterfeit credit cards or a stolen account number."

And no, neither the Broadway nor any other retailer will tell you what its fraud investigation uncovers. And there are two understandable reasons for this.

One, today's scam artists, Loud admits, "have gotten extremely sophisticated," and for the department store to explain to you how the swindle worked simply spreads information on the store's internal operations, which are, obviously, already too well known to too many people.

The second reason, Loud reluctantly admits, is that occasionally a scam like this will involve someone on the inside. And this is a bit of internal housecleaning that no retailer wants to bare its soul about.

I wouldn't blame the Broadway for this. It did take a little longer than it should have (the investigation turned out to be more involved than normal, Loud says), but by now you've received the store's apology, the charge is off your account and you've got a fresh account number.

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