I just read a thread where the comments heavily suggested OP use a credit card when they travel again so that it would be easier to dispute a fraudulent charge. What makes a dispute through your bank less successful?
In: 1228
The job of a debit/credit card is to perform transactions.
Imagine YOU are your friend’s debit/credit card, and are going to make a transaction for them.
Debit card:
Your buddy calls you and says “Hey I want to buy a carbon fiber road bike on Craigslist this weekend, but I’ll out of town. Can you buy it for me?” *Here’s $1000*”.
He gives you the address, you go there, seller takes your money but refuses to give you the bike. You call your friend and say “Hey man, your $1000 was stolen. You’ll have to figure this out when you get back.”
Are you at fault here? Nope. Should you reimburse your friend the $1000? You certainly don’t think so, but your friend wants his money back. You’re a nice person and want your friend to be made whole, but you’re not paying $1000. You tell him to take it up with the seller and/or the police.
If the police come knocking on your door, you’re answering the bare minimum questions. Here’s the guy’s address, he didn’t give us the bike. If they take you in you’re requesting a lawyer. Your friend is turning into a real POS over his mistake, and you’re putting your walls up.
You and your friend do NOT have the same incentive to get the money back. Your friend wants $1000 back, and if you’re not defensive it’ll end up being your $1000.
Do you learn from your mistakes? Improve your security? Not really no. Next time someone wants you to buy something, you’re either going to say no (for a bank, that means simply not doing business), or you’re just going to do it. It’s not your money on the line, so why not.
Credit card:
Same scenario. Friend wants to buy a bike, but this time he says “Hey can you pay him and I’ll pay you back later?”
You and him have somewhat of an account together. He does this all the time, and you really don’t mind. You’ve come to trust him. You buy stuff for him every month, and he ALWAYS pays you back, sometimes with interest, otherwise you wouldn’t put up with it.
“Sure”.
You go to the seller, they take your $1000, and same deal. No bike for you.
What’s different? Well this time around, you BOTH want the money back. In fact, you’re a little worried that if you put it on your friend, he’s going to ghost you. Most importantly, this time around you’re incentivized to work with police because there’s no chance of you losing more money. You can only get money back.
That’s the KEY difference. This time around, you care.
After all is said and done, what are you going to do differently next time? Well, you could just not do it (Visa doesn’t make money by not making transactions though), OR you could beef up your security a bit.
For one, you’re going to take down a lot of information. Date and time, address and description of the seller, etc. You’re going to pay attention to the kinds of purchases your friend wants you to make. If they suddenly ask for something unusual, or something far away, you’re going to question it first.
That’s what Visa and Mastercard do. They improve their security to prevent these things from happening, because if they don’t, then the lender (and them by legal extension) are on the hook for lost money. They’re going to work out a system where they hold transactions for one or two business days. E.g. if it were Visa making a craigslist purchase, they’d be handing over a time-release lock box that they can disable and retrieve if the bike is not delivered or is defective. They’d have the seller’s full description, whereabouts, and they’d have the police on speed dial with a PI on retainer to follow the buyer or seller if there was an issue later.
That’s the difference between a debit and credit card.
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