What Is Zero Liability Fraud Protection?

Quick Answer

Zero liability protection means you don’t pay for unauthorized, fraudulent charges on your credit card.

A woman holding her credit card and looking at her laptop, happy about having zero liability fraud protection from her credit card isssuer.

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Zero liability protection means you don't pay for credit card charges you didn't authorize. While federal law caps fraud liability at $50 if it is reported within two days, credit card issuers typically absorb the loss and cardholders pay nothing. Here's what to know about zero liability fraud protection.

What Is Zero Liability Protection?

Zero liability protection is a guarantee by the credit card issuer that you don't have to pay charges made fraudulently without your consent. That is true whether a cyberthief used your credit card number, your wallet was stolen or you dropped your credit card and someone picked it up and used it.

All consumer American Express, Discover, Visa and MasterCard credit cards offer zero liability protections. It's worth noting that debit cards have fewer protections, even if they have the aforementioned logos.

Here's what zero liability fraud protection covers:

  • Charges made with your credit card without your consent
  • Charges made using your credit card number, but not the physical card, without your authorization

And here's what zero liability fraud protection doesn't cover:

  • Charges made by an authorized user on your credit card
  • Charges made by someone who was given access to the credit card or credit card number by you or by an authorized user

How to Report Credit Card Fraud

With most credit cards, you can sign up for alerts for when the card is used, often for a minimum amount that you set. If you get an alert for a charge you did not authorize, it's best to report suspected credit card fraud right away. That way, the card issuer can cancel the card and send you a new one—and you won't have to unwind a string of payments reported late, credit score changes and more.

You can dispute a charge quickly:

  • Through your credit card app: This may be the quickest way to report fraud.
  • Online: Credit card issuers generally have websites where you can report the loss.
  • By phone: If you still have your credit card, the number is on the back. You can also check on your issuer's website or by doing an internet search.

How to Protect Yourself From Credit Card Fraud

If you use credit cards, there is no fail-safe way to protect against credit card fraud. But you can minimize the chance that it will happen by:

  • Keeping cards secure: Don't share card numbers or passwords, and notify your credit card company if a card goes missing. Some issuers have the option to lock a credit card so it cannot be used while you look for it, if you suspect it's going to turn up.
  • Shopping only on secure websites: Make sure a website is secure before making a purchase. Relatedly, it's crucial to use a secure internet connection.
  • Shredding unwanted documents that include your credit card number: Even though merchants are also likely to ask for a CVV number and expiration date, you don't want to give anyone puzzle pieces to help them access your credit card.
  • Being alert to phishing scams: Emails and texts that look real may actually be from scammers. Don't "verify" credit card information in response to an unsolicited mail or text.
  • Checking credit card statements and credit reports regularly: Transactions or accounts you don't recognize can be a tip-off to credit card fraud, and you can check credit report for free at Experian.

The Bottom Line

You can safely use major credit cards, knowing that if they are lost, stolen, cloned or otherwise compromised, you won't be responsible for charges you did not authorize. While federal law caps your responsibility at $50, it is standard practice among credit card issuers to absorb losses from credit cards that are misused in this way.

While you cannot entirely eliminate the risk of credit card fraud, you can keep your card as secure as possible and set up ways to discover potential credit card fraud quickly. One important way is to keep tabs on your credit report and score. Activity you didn't authorize or large, unexplained swings in your credit score can suggest fraud.

Experian offers free credit monitoring that can help you spot and identify changes that could suggest a credit card has been compromised. Reporting suspected credit card fraud quickly can help you move past it before there is a bigger, more complex mess to clean up.