Credit Card Issuer Should Be Concerned About ‘Skimming’
Question: In February my credit card statement showed charges worth almost $500 at three different places in San Francisco. Because neither my wife nor I had been in the city, I protested the charges. The credit card company credited my account for one of the charges but not the other two. They sent me photo copies of the two charges along with a letter saying that the receipts were produced from the magnetic strip of my credit card and they considered the charges valid. They did not care that the receipt had someone else’s name and signature on them. Where can I get help to resolve these fraudulent charges?
Answer: Obviously, the credit card company hopes you’ll give up and go away. Your job is to make the company sorry it ever doubted your word.
The company’s explanation for not removing the two bogus charges is absurd. Credit card companies know very well that criminals easily can duplicate the magnetic strips using pocket-size devices. It’s called “skimming,” and it’s on the rise.
What probably happened is that someone to whom you legitimately gave your card, such as a waiter at a restaurant, took a moment to swipe your card through such a device. This criminal either sold the information or used it himself to have a little holiday.
Your first step is to demand the company send you a new card with a new account number, if you haven’t been mailed one already. Your next step is to file a police report, if you can, said Maxine Sweet, spokeswoman for Experian, one of the three major credit bureaus.
That might be harder than it sounds. Not all cities or states will allow you to file police reports for such thefts, reasoning that the credit card company is the ultimate victim, not you, Sweet said. Go figure.
In any case, you should ask the credit card company to send you a fraud affidavit, Sweet said. Complete the form and have it notarized, attach the police report if you have one and send the whole mess, along with a letter of dispute, to the credit card company. Keep a copy for your files.
That should get the charges removed. If not, contact Experian or one of the other credit bureaus and ask for an investigation.
You’d also be smart to get a copy of your credit report to see whether any other unauthorized accounts have appeared. Because you’re a fraud victim, you’re entitled to a free report to check.
If this sounds like a lot of trouble for less than $500, you’re right. You have to ask yourself why a credit card company that supposedly wants your business would put you through this, particularly after acknowledging that one of the three charges was bogus. No one would blame you if, after you got your money back, you looked for a credit card issuer that was more interested in customer service.
Outcome of Estate Tax Repeal Is Uncertain
Question: I read that the estate tax repeal is in fact a huge tax increase, because it eliminates the “step-up” in the value of inherited property. Under current rules, if your parents had bought property 40 years ago for $50,000 and it was worth $750,000 when you inherited it, you could sell it without paying any capital gains tax. With the elimination of the step-up, however, your taxable profit on the sale would be $700,000! Can you verify whether this is true and report whether this huge hidden tax increase is in the estate tax repeal that President Bush recently signed into law?
Answer: Whether the repeal will raise more taxes than it eliminates is a subject of much debate. But you probably shouldn’t lose much sleep over it either way.
First of all, the rules about the tax treatment of inherited assets aren’t scheduled to change until the estate tax repeal takes full effect--in 2010.
As you probably know by now, the full repeal itself is scheduled to last only one year before sunsetting. That means the rules we have now about tax treatment would come back into effect in 2011, along with the estate tax itself.
Even if Congress makes the repeal permanent, however, the rules about basis probably will affect only the largest estates.
Until 2010, most inherited assets will continue to receive the step-up in basis you described in the first part of your letter. When full repeal takes effect in 2010, each person will be allowed to leave up to $1.3 million with the step-up in basis. In addition, each person can leave $3 million to a spouse with the favorable tax treatment. That means that, at death, up to $4.3 million of an estate will be revalued for tax purposes.
The vast majority of estates still will get the step-up in basis. Only about 2% of people who die leave estates worth more than $600,000.
It’s true that heirs of the largest estates could wind up giving back in capital gains some of the benefit they would gain from estate tax repeal.
These heirs also will face something of a paperwork nightmare, because they may be forced to track the tax basis of assets over decades and even several lifetimes, if the assets are inherited more than once.
Congress tried this carryover-basis system once before--in the 1970s--before abandoning it as unworkable. It’s anyone’s guess whether this experiment will be any more successful or whether lawmakers will come up with yet another scheme in a few years to replace this one.
As the outcome is uncertain, your best bet is to stay in touch with your estate-planning attorney and make adjustments in your plans as the laws change.
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Liz Pulliam Weston is a personal finance writer for The Times and a graduate of the personal financial planning certificate program at UC Irvine. Questions can be sent to her at moneytalk@latimes.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. She regrets that she cannot respond personally to queries.
