Unauthorized Credit Card Charges and What to Do if You Incur Them

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Although it’s not fun to think about, the truth of the matter is that you or someone you know will most likely end up with unauthorized credit card charges in your lifetimes.

Cyber crime is an ever-growing problem with no real solution in sight. People on the other side of the world can take your credit card information and use it to make all kinds of purchases without your permission. Fortunately, while stopping it can be nearly impossible, reacting to it in such a way that mitigates the damage done is very realistic.

The difference between credit card and debit card fraud liability

If you’re like most people, you use a combination of credit cards and debit cards. It’s important to understand that both can be the victim of fraud, and they work quite differently.

[Related: When to Use Credit or Debit]


Reported unauthorized charges on a debit card can be reversed if you notify your bank within two days of learning of the theft, but you may still be responsible for up to $50 of the amount you lost. Fortunately, some banks will waive this liability. If you report the unauthorized charges after two days, but less than 60 calendar days after your statement is mailed to you, the limit to your liability increases to $500.

After 60 days, you’ll most likely have to shoulder the entire loss.

One more quick note about unauthorized debit card charges: just because someone used your PIN doesn’t mean you’re out of luck. Many people have had their PIN number stolen or used by someone who knew it but wasn’t given permission to use it. You’ll need to sign an affidavit explaining what happened, and you may be able to get your money back.

Your liability for unauthorized use of a credit card is much lower. Under some circumstances, you can be held liable for $50. If your number is stolen, but not the card, your liability is zero. If you report a lost or stolen card before it’s used by anyone else, your liability is zero.

Fraud red flags

Virtually all major financial institutions have precautionary measures put in place to catch unauthorized charges the moment they happen. Red flags can include:

– Geographic region (countries other than your own, and areas in and out of the U.S. known as “fraud-prone” zones)

– Uncharacteristic purchases

– Numerous, small purchases (this may mean someone is testing your card first before going on a spending spree)

If a red flag comes up, the transaction may be declined. In some cases, the account will be suspended until the card issuer can confirm that you are the person making the purchases and not the victim of a thief.

Understanding phishing

One of the most common forms of identity theft is phishing. A thief sends an email or text message pretending to be someone else – usually an institution or person you’re familiar with. The goal is to get you to respond with your personal information or to click on a link that takes you to an official looking website but that is actually a fake.

For example, the message might appear to be from the lender that holds your auto loan. It may say that there was an issue with your last payment, so they need you to update your payment information. If you provide it, you’ve unwittingly given a thief access to your credit card or bank account.

No matter who a party claims to be, always check the source of any email or text message that asks for personal information. If a message appears to be from your bank, call the bank to ask if they sent it.

Other threats

Always check your accounts regularly for signs of unauthorized use. Even though phishing may be one of the most popular options for stealing people’s information, it’s hardly the only way a criminal could start charging you for their purchases.

Skimming is another real threat. In this method, a thief uses a device to duplicate the information on your credit card. They can use the information to create a duplicate of your card. Skimmers are often employees at businesses that have access to your credit card out of your sight (like waiters at restaurants). Other times, thieves install the devices in card readers at gas pumps or ATM machines.

Skimming is much more difficult to pull off on EMV cards (“chip cards”). If your card has an embedded computer chip, that means a unique authorization code is generated for each transaction. Thieves can’t accomplish this on a skimmed card. If you haven’t received a chip card to replace your old magnetic stripe card yet, call your bank to find out when you will.

What to do if you notice unauthorized charges

Check your accounts regularly. Log in at least once a week to review your bank and credit card accounts. The sooner you notice suspicious activity, the sooner you can resolve it.

If you do notice an unauthorized charge on your credit card or funds missing from your bank account, call the card issuer to report the unauthorized charges. If you login to your account online or use the mobile app, you can report the theft those ways, too.

Some issuers offer emergency card replacement, but you may have to pay a fee if you need expedited delivery. Otherwise, your new card should arrive within 7-10 days. If you’re near a local branch, you may be able to walk in and get a replacement immediately, particularly for lost and stolen debit cards.

Debit card issuers generally investigate fraudulent charges within 10 days and take action within 3 days. Credit card issuers may take longer, but you aren’t responsible to pay charges during the investigation.

If your account has not been open for 30 days, the bank has a little longer to investigate (20 days). After the investigation is complete, the bank has three days to notify you of their findings. The bank must resolve the investigation and reversal of the charges within 45-90 days, depending on the circumstances.

If the bank or card issuer finds that the charges were not fraudulent, it must notify you in writing before taking back any money that was returned to you during the investigation.

In some instances, someone can take money from your account without your permission. If you are subject to a tax lien or wage garnishment, your account can be debited and you will not be entitled to a refund.

Kimberly Rotter
Kimberly Rotter is a writer and editor in San Diego, CA. She and her husband have an emergency fund, two homes, a few vehicles, a handful of modest investments and minimal debt. Both are successfully self-employed, each in their own field. Learn more at RotterWrites.com.

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