Why You Must Check Your Credit Card Statements (Part II)

Part of dealing with the U.S. mail each day is handling the variety of bills and statements which come our way. In this post , I gave some tips on how to organize all of the paperwork.

The question I have today is this, “How closely do you examine those statements for accuracy?” In a world where we are slow to disclose our social security number yet all-too-quick to hand over our credit card to the 18-year-old at the local restaurant, keeping an eye on those statements is your only defense in avoiding your hard-earned money being taken by someone else. In this post and the next, I will describe two situations from my own experience which illustrate what I mean.

Several years ago, my wife opened one of our credit card statements and began to ask me about a purchase to a “home shopping network.” After all, she did not make the purchase and neither of our Shelties knows how to use the phone, so it pretty well narrowed the culprit down to me! As I was trying to explain my innocence, my wife noticed two other charges to other home shopping networks totaling in the hundreds of dollars.

In addition to these three bogus charges was a small but interesting charge--$20 to a doctor. My wife had visited that doctor, and the visit appeared on the statement. On the following day was a $20 charge to the same doctor even though my wife had not visited that doctor a second time. On each of the next three days, a charge appeared for the home shopping networks.

Could that $20 charge have something to the do with the hundreds of dollars being charged to our credit card for purchases we had not made?

Our calls to the home shopping networks enlighten us as to the how well their employees are trained to give very little information. “Your records show I made the purchase and you are shipping the merchandise to me? Well, what is the address to which you are shipping it?”, I asked. You will not get an answer to that question—unless you happen to stumble upon an employee who is very new and didn’t know she was not supposed to be quite so helpful. That is exactly what happened with one of the three home shopping networks we telephoned.

A quick Google search of that address revealed the name associated with it. My wife was astonished to see that the name on the screen was exactly the same as the name of the receptionist at the doctor’s office! It seems that the receptionist had been copying down names and credit card numbers from the doctor’s customers and was using them to rack up quite a treasure for herself. Not only was she the one who handled the credit cards, but she was also the one who both prepared the deposits and then took them to the bank.

Her practice was to take any cash paid to her and pocket it. She would then charge that amount to one of the credit card numbers she had stolen. Nobody ever realized that no bank deposits were being made, because she alone handled parts of the process which under good accounting practices would have been divided up among multiple people.

In the final analysis, we did not pay one dime of the bogus charges. A couple of the calls to our credit card company constituted the extent of our time and energy involved. The receptionist was arrested, and life was good again.

Yes, looking at that credit card statement and matching up the receipts takes a little time. It is, however, our best defense. People make mistakes. Other people simply seek to rob you. A little awareness go a long way.

Why You Must Check Your Credit Card Statements (Part I)

Paying for purchases with a credit card, signing the merchant's copy, and being presented with my copy is a ritual I have known all of my adult life. Lately, I am being asked a question with increasing regularity, "Sir, would you like a copy of your receipt?" In my mind, there is only one correct answer. Hopefully, after reading my experiences in this post and the two which follow, you will feel the same way.

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Many smaller businesses are using an iPad equipped with Square instead of the usual cash register. Emailing a copy of the receipt seems easier for them than printing the receipt. Naturally, when we begin to introduce options for how the receipt will be produced, the question of whether or not to provide a receipt at all soon becomes one of the options. For the sales clerk, skipping the receipt is the easiest option, and something in the tone of voice communicates a message that perhaps you and I don't want to fool with that little piece of paper either.

Don't fall for it. When asked if you want a copy of your receipt, the only answer to give is "yes." That little piece of paper is your record of what you purchased and its cost. Keeping up with it and having one more piece of paper to file may seem an inconvenience. Yet, that little piece of paper will save you when credit card fraud becomes the issue.

Consider the news release in December regarding millions of credit card numbers being compromised at Target stores across America. The thought is alarming that someone could have our credit card information and make purchases as if they were us. Our only defense is a three-pronged approach:

1. Save credit card receipts.
2. Match the credit card receipts to the charges on the statement.
3. Immediately dispute unauthorized charges.

Consider what seemed a safe transaction. My wife and I ordered a pizza from a local establishment and paid over the phone with a credit card. The delivery person arrived promptly with a piping-hot pizza, and presented me with the receipt. I gave the driver a cash tip, and thanked him.

Several days later, my wife checked the charges on our credit card statement versus the tickets we had accumulated. The charge for the pizza had suddenly increased by $5.00. We noticed the exact same thing for a pizza charged a couple of weeks prior.

Because we had our receipts, we knew what the charges should have been, and were confident when we called the management of that pizza parlor. We were able to provide the date and time, as well as the name of the driver, all from our receipts. As it turned out, the same driver had been involved both times. He had pocketed the cash tips, and then added additional tips to the credit card receipts before returning to the store.

Many people don't want to be bothered with keeping up with recipes. It's easier to simply pay the bill and assume it's correct. They serve as prey for dishonest people, like the one who delivered our pizza. This person probably added tips to the tickets of countless others who had paid by credit card, yet gave the tips in cash.

As a result of our call, the driver was fired, and the regional manager vowed to press charges against him. Our money was refunded, and we received coupons for free purchases.

Today, you see one example. In the next two posts, I will share other experiences with larger dollar amounts. In each case, good record keeping on our part and examination of our statements saved us from becoming victims of credit card fraud.

Organizing credit card receipts

For many people, handling credit card receipts is an exercise in frustration. As in so many other areas, a good system is the answer to turning something frustrating into something extremely easy. Outlined here are the nuts-and-blots of the system we use at our home.

1. Label a file folder for each credit card you have. Include store credit cards as well as major credit cards. These folders become part of your reference filing system.
2. Label a file folder “Credit Card Receipts.” This folder will be placed in a tickler file folder. I like to use a colored folder so that it is easy to locate.
3. Label a folder “Tax Deductible Receipts.” This file folder may go in your tickler file for the time of year you will be compiling your tax returns.
4. In the evenings, empty you pockets, briefcase, etc. of any credit card receipts you have collected during the day.
5. Take the loose receipts and put all of them in the back of the Credit Card Receipts folder. Filing to the back of the folder keeps the folder in chronological order and makes the job of matching items on the statement with their corresponding receipts much easier. Do not worry that receipts from different credit cards are being mixed together.
6. When the credit card statement comes, throw it in the tickler file for the day you want to handle bills. Saturday is usually a good candidate. When Saturday comes, you will no doubt have several bills to pay, and you will handle them all at one time.
7. Pull the Credit Card Receipts folder and begin with the first statement. For each line on the statement, pull the corresponding credit card receipt. You should have a receipt for each item on the statement. Any missing receipt is a red flag that you should take seriously. It is a sign of either holes in your system or fraudulent charges. If it is the first, shore up those holes. You will then have a reliable way of determining when you are being charged for something you did not purchase. Are there others in your family who also use credit cards? If so, they must be diligent about getting their receipts into the Credit Card Receipts folder.
8. As you are matching items in the statement to the receipts, set aside any which will be tax deductible.
9. Once you have matched all items to the receipts and the statement has been verified as being correct, write the check and tear off the portion to be returned.
10. Take any of your tax deductible receipts and drop them into the Tax Deductible folder. If you need to write any explanation on any of them, now is the time to do that.
11. Take the remaining receipts and staple them to the statement.
12. File the statement in its folder in your reference files.

Should you need to go back and find a receipt, it can be in only one of two places. It can be stapled to the statement in the folder for that credit card. It can be in the Tax Deductible folder. It can be in no other place. Should you need to return an item and need the receipt, simply think in terms of the approximate time the purchase was made and with what card. It will take only a few seconds to scan the statement for that time period and locate the month when the purchase was made. Once you have the correct month, thumbing through the receipts to find the correct one takes only seconds.

Having a good system is almost as easy as having no system at all in terms of the time you will spend to maintain it. A good system is a huge time-saver for all the times you need to find a receipt and the money-saver when you need to dispute fraudulent charges.