The New Frontier In Fraud: Traveler's Checks v. Credit Cards

27 Sep The New Frontier In Fraud: Traveler's Checks v. Credit Cards

I prepped for a vacation out of the United States.  I wanted to limit the use of my credit cards, having heard horror stories of credit card numbers being stolen and used to quickly rack of thousands of dollars worth of fraudulent charges.  I have heard stories of over-spending on vacations and paying for the vacations for years after. What’s a person to do?   Cash?   No way am I carrying more than $100 in cash while on vacation.  Ah, traveler’s checks–they are guaranteed replaceable, so no worries, right?

I headed down to the local bank to purchase traveler’s checks and had myself a budget, so much per day.   The bank representative noted that they do not issue many traveler’s checks these days.  I chuckled as I thought of the credit card bills and my determination to not use my card while on vacation.

I have just arrived home from that vacation and guess what?   Two-thirds of my traveler’s checks sit in my wallet as place after place refused to take the check but would take a credit card with no problem.   The hotel took the checks.   The cruise ship cashed two checks for me.  The tour company took the checks.  Our trip ended in the United States.   Grocery stores would not take traveler’s checks.   Fast food places would not take traveler’s checks.   Coffee shop would not take a traveler’s check as the cashier pointed to my wallet (where a credit card was peeking out) and said “those, we take.”.   I fully realize that one of the largest problems facing businesses today.   But having the proper procedures in place can reduce or eliminate that challenge (i.e.,  examining the check for tell-tale signs of forgery, missing watermarks, having the customer produce photo identification — all of those take time away from sales, I suppose).

Tomorrow, I will take my remaining traveler’s checks and go make a payment on my credit card.   OH, no wait.  I can’t.   My credit card cannot be paid until the statement is posted and that won’t be for two more weeks.

This is disturbing.  Consumers, I believe are protected when their traveler’s checks are stolen or their credit card is stolen.  Businesses would be “burned” either way–the business is defrauded and  has taken a “hit” by the fraudulent credit card or the fraudulent traveler’s check. 

For consumers, traveler’s checks are guaranteed replaceable.  They are good for the consumer as there is no interest, the checks are supposed to be the same as cash.  Credit cards are not guaranteed replaceable, generally not good for the consumer, rack up interest charges, and definitely not the same as cash.  

What I find disturbing is why a business would prefer to use one transaction method over another, when both are equally harmful to the business.  What is it that I don’t know about the profit generation of credit cards?   Are there rules in place from the credit card companies at this point that prohibit the acceptance of traveler’s checks?   Is there some insurance policy in place that guarantees payment if the business accepts a fraudulent credit card as opposed to a fraudulent traveler’s check?   It is just disturbing that our society is more trustful of large credit card companies and appears to be  moving towards a society dependent on plastic.

 

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.
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