Despite “zero liability” promises from credit card companies and protection from federal laws, there are instances where consumers might be liable for fraudulent credit charges.

Credit card fraud is big business: In 2013, fraudulent use of existing credit cards reached $11.1 billion in the United States, according to Lexis Nexis’s annual True Cost of Fraud report.

Victims have recourse: The Fair Credit Billing Act limits liability on stolen credit cards to $50 (with some stipulations, which are explained below). Most major credit card companies and issuing banks also offer zero liability protection to consumers. In other words, if a thief uses your account to make purchases, you’re not liable for a penny of the charges.

Unless, that is, something about your fraud situation makes it one of those that’s not covered. Credit card issuers’ websites can be a bit murky about what exactly will take zero liability off the table: Accounts must be “in good standing” and cardholders must exercise “reasonable care” in protecting their cards and identity. We talked to experts and came up with seven scenarios that might leave you responsible for fraudulent charges on your credit or debit card.

1. You wait too long to file a claim.

When it comes to reporting fraudulent charges, time is of the essence, according to the Fair Credit Billing Act and Electronic Fund Transfer Act. If you report a stolen credit card before any charges are made, you’re responsible for nothing. If you wait two billing cycles before reporting a lost or stolen credit card, you could be liable for up to $50 in charges. For debit cards, if you wait more than two days but fewer than 60 days after receiving your statement, you can be liable for up to $500 in charges. Wait more than 60 days to report debit card fraud/theft, and you could be liable for all the money taken and then some — for instance, funds in a savings or other account linked to your debit account.

The timing issue “is an interesting concept,” says Linda Sherry, director of national priorities at Consumer Action, a consumer-rights nonprofit. Because of the 60-days stipulation, she recommends that cardholders create and check online accounts so they can spot fraud earlier rather than later.

As for debit cards, be safe and don’t link your checking account to a savings account, Sherry advises.

2. You are behind on credit card payments.

Language for card issuers’ zero liability protection stresses that cardholders’ accounts must be in good standing. “That would mean you’ve at least made the minimum payment — you’re paying your bill on time every month by the due date,” says Kathryn Moore, a credit counselor with GreenPath Financial Wellness, a nonprofit agency in Detroit. It doesn’t, she says, mean that your account must be paid in full every month. Note that while paying late may erase your protection from the card issuer, it has no effect on the protection granted under the federal law. You retain that — if you act quickly.

3. You fail to exercise “reasonable care” in protecting your identity.

That means not handing your credit card to someone else to use; it means safeguarding your PIN as if it were the key to Fort Knox. “You don’t share your PIN with people; you don’t write your password on the back of your card,” Sherry says. If a card issuer can prove that you handed out your PIN, “they will balk,” she says.

4. You’re not willing to file a police report.

Say you give your child your credit card to buy a used bicycle; instead, that child splurges on a BMW motorcycle. It’s not the blood relation that scotches the deal, it’s the fact that in order to have the charges covered, you have to file a claim and a police report. That’s the catch: “If it’s a family member, you might not want to prosecute,” Sherry says.

Moore recalls a client whose teenage son used her credit card without her knowledge. The client reported the unauthorized use to the credit card company, which told her to file a police report. “She wasn’t going to turn her son in, so she paid the bill,” Moore says, adding that the bill was about $1,000.

5. You made the purchase with something other than a personal credit card.

Visa, for example, does not extend zero liability to purchases made with corporate cards. Nor does it extend that protection to purchasing cards, which are corporate cards issued to a company’s frequent buyers; the cards often have spending limits and restrictions attached. Visa also does not extend zero liability protection to transactions processed by a firm other than Visa.

6. You made the purchase with a card not issued in the United States.

Visa USA, for example, extends zero liability protection only to cards issued domestically, though Visa operations in other countries may offer similar protections.

7. The perp is you.

Brian Vosburgh, creditor services and relations manager at Cambridge Credit Counseling Corp. in Agawan, Massachussetts, remembers one client who had stolen and made charges on about 10 different credit cards. He was caught and convicted; the judge ordered him to repay the credit card companies. A few years later, the thief fell on hard times and contacted Vosburgh to concoct a debt management plan. No dice: Creditors don’t accept payment arrangements on fraudulent accounts, Vosburgh says, adding “I’ll never forget this one.”

These instances aside, consumers can take one great big measure to make sure zero liability will always mean just that: Take an active role in monitoring your account. “You have got to be responsible for reading every statement for every account every month, and if that’s too much, you have too many accounts,” Moore says. “At the end of the day,” she adds, “you’re responsible for your finances.”

---