The Law: Tightening Plastic Credit

In recent years banks and retailers have competed vigorously to stuff U.S. wallets with millions of credit cards (see Music). Their’ success quickly taught burglars and muggers that a stolen card can fetch several thousand dollars’ worth of merchandise in a few hours, to say nothing of a $100 resale rate from the nearest fence. Last year card thieves netted an estimated $30 million in goods and services from the nation’s 15 major oil companies alone.

Last week corporations were given a new incentive to crack down on credit-card fraud. Under an amendment to the Truth in Lending Act, legitimate cardholders are protected from legal liability for more than $50 of unauthorized purchases by credit-card thieves. A company can go to court to collect that $50 maximum from the cardholder only if it had previously advised him of his liability and provided a self-addressed prestamped notice to be returned when the card is stolern or lost. The law also requires that all new credit cards bear clear identification of the holder, usually a color photo or signature. Now that he has legal protection against unauthorized credit-card purchases, the customer has only one remaining problem: how to pay for the goods he does authorize.