Ohio Subscriber

The answer here depends on whether the credit card company can be seen as a drawee. A drawee is defined in the legal dictionary as one who is requested to pay the amount of money mentioned in the transaction. As we see it, a credit card company gives the person so much money on credit and then when the money is used, charges the person interest for using the money. So, when someone uses a credit card, he is asking the company to pay the amount the user of the card has been charged. So, if the credit card company then refuses to make that payment or as in this case, takes back the money paid, that makes the company a drawee in our opinion. So, the exclusion would apply. The purpose of the exclusion is to make the insured take the responsibility as a business concern to check and double check credit card and check users.

However, you might want to check with an attorney who is familiar with the law in your area to see if credit card companies are considered as drawees in that area just to be sure.

Editors Note: After review, the FC&S Editors believe that this answer is incorrect and a credit card company is not considered a drawee. Merriam Webster defines drawee as the party on which an order or bill of exchange is drawn; the party (as in, a bank) on which a draft is drawn. With a credit card, unless it’s a secured card, the credit card company is not holding the insured’s money, it is making money available on a brief loan basis. The insured has not deposited money to the credit card company; therefore, a credit card transaction is not a withdrawal of the insured’s funds the way a bank check would be.

WordNet 3.6 defines it as: drawee the person (or bank) who is expected to pay a check or draft when it is presented for payment. With a credit card transaction, there is no check or draft being presented; the card is being used to pay for a product and the holder of the card is to pay the card company upon receipt of the bill. The credit card company is fronting the money on the faith that the card holder will pay the bill; it has no idea whether the holder will really pay. The bank has the account holders money and if a check is presented for more than the account holder has the check bounces; the bank is not out any money, whereas if the credit card company fronts the money based on false pretenses, it can get the money back from the vendor, but may or may not get the funds back from the cardholder.