Golden, Maisel sponsored legislation
By Paula Katinas
Brooklyn Daily Eagle
You open up your credit card statement, look at it, and frown. As if the bill itself isn’t bad enough, inside the envelope is a bunch of blank checks with your name on them and a friendly letter from your bank inviting you to use the checks.
You take these so-called “convenience” checks and throw them in the trash.
But if a thief finds the checks and uses them, are you liable for the costs? Does the credit card company have the right to charge you for the thief’s purchases in your name?
Up until recently, the answer was yes. But thanks to a new state law recently signed by Governor Andrew Cuomo, consumers are now protected in the event of lost or stolen convenience checks.
The bill signed by the governor protects consumers from liability for unauthorized use of unsolicited convenience checks. These convenience checks, often mailed by credit card companies to account holders, are easy targets for unauthorized users looking to commit fraud, according to state Sen. Marty Golden (R-C-Bay Ridge-southern Brooklyn), who sponsored the legislation in the senate. Assemblyman Alan Maisel (D-Marine Park-Mill Basin) was the assembly sponsor.
Under the new law, cardholders will face no penalty for unauthorized use of unsolicited convenience checks associated with their account.
“The state is doing all it can to ensure that the finances and possessions of New Yorkers are guarded against fraud and greed,” Cuomo said at the signing ceremony last month. “We are taking action to make sure that credit card holders are not held responsible when they are the victims of financial fraud,” the governor said.
“I applaud Governor Cuomo for signing into law legislation that will better protect New Yorkers from being a victim of financial fraud,” Golden said. “We must do everything in our power to protect hardworking residents against scam artists who prey, and look to, dismantle the financial security of others for their own personal gain."
Maisel said consumers should be held liable for checks that they didn’t request in the first place. “Consumers should not be held responsible for the fraudulent use of these checks which are sent to them without their knowledge or permission,” he said.
Aside from the possibility of fraud, there is another reason to be leery of convenience checks, according to Bankrate.com, a consumer website. Using the checks could leave a consumer deeply in debt, financial experts said.
That’s because there’s a charge associated with convenience checks, according to financial experts cited on the website.
The interest rate on convenience checks is usually much higher than the interest rate charged on credit card purchases, consumer advocates told the website.
The convenience check is linked to a consumer's credit card account and can be used to make purchases or get cash advances.
If a consumer wishes to make a purchase all he or she has to do is write a check for the purchase amount to a merchant and sign the check. The credit card company will pay the merchant when the check is cashed. The amount of the check is deducted from the consumer’s credit line. If the consumer wants some quick cash, all he or she has to do is write a check out to himself or herself and cash it.
Using a convenience check, even if it’s only two or three times, can quickly wreak havoc on a consumer’s credit line, financial experts warned.