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When is a charge on a credit card unauthorized?

Be vigilant if you see a charge you don’t recognize on your credit card and get in touch with your card issuer

Summary

If you find an unauthorized charge on your credit card statement, you have certain remedies to tackle the situation so that you are not held responsible for paying the money due on the transaction. Here’s what you need to know.

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Do you see a charge you don’t recognize on your credit card statement? It could well be an unauthorized charge, or one that’s initiated without your permission.

This sort of charge comes about when neither you nor a person you authorized is responsible for the transaction that’s charged. Before you decide that a charge is unauthorized, or fraudulent, you should do your due diligence.

Make sure that you, or an authorized user, did not enter into the transaction, or that you didn’t let anyone else use your card. Also be aware that merchants oftentimes use various names for billing purposes. That’s why you need to find out if this is a legitimate transaction that the merchant has billed under another moniker.

If a charge on your credit card is indeed unauthorized, you have certain remedies to tackle the situation so that you are not held responsible for paying the money due on the transaction.

Check out all the answers from our credit card experts.

Ask Poonkulali a question.

See related: How to undo unauthorized credit card charges by a family member

Liability for unauthorized charge

One major protection you have against unauthorized use is that you are only liable for up to $50 in charges, no matter how high the unauthorized charge amount is. In addition, lenders often will even release you from liability for this $50 limit as a result of the Visa and Mastercard networks’ “zero liability” practice.

And providing further relief, if the unauthorized use was done with just your card number, and not the actual card itself – as is the case with the “card not present” transactions that typically occur with online purchases – you are not liable for any unauthorized use at all.

You should immediately get in touch with your card issuer once you become aware of the unauthorized use of your credit card. That way, the issuer will take steps to cancel your card, issue you a new one and prevent any further unauthorized charges.

The National Consumer Law Center advises in an online post that if the issuer doesn’t take unauthorized charges off your account, it should investigate the charges.

“A reasonable investigation might include analyzing the signature on the credit card slip, obtaining a copy of a police report or comparing where a purchase was made versus where you live,” according to the NCLC.

See related: How to report and protect yourself from credit card fraud

Disputing an unauthorized charge

If you find out about the unauthorized use after receiving your card statement, you have the recourse, which the Fair Credit Billing Act offers, of filing a dispute with your card issuer about a billing error.

The office of the Minnesota attorney general advises, “To protect your rights, it is not enough to pick up the telephone and complain to the financial institution about a billing error on a credit card. A consumer must send a written notice to the financial institution to report such a billing error.”

Each card issuer has its own procedures for filing disputes, so you should get in touch with your issuer to find out what its process is. You have only 60 days from the date you received your card statement to file this dispute, which you should send to the address the issuer provides for this process.

The office of the Kansas attorney general advises that some card issuers will even entertain dispute filings beyond this 60-day timeframe, so you should follow your issuer’s dispute procedure even if you are beyond this FCBA window.

In general, though, you should report any unauthorized charges to your card issuer as soon as you are aware of them. You should also send in a statement with your dispute form explaining why you think the charges are not authorized.

You could also take the further precaution of putting in a fraud alert with the major credit bureaus – Equifax, Experian and TransUnion – to prevent any unauthorized user from further trifling with your identity.

See related: How the three major credit bureaus work

Resolving your dispute about the unauthorized charge

The card issuer has 30 days to acknowledge your dispute filing, and must provide any remedies to you within two billing cycles or 90 days after receiving your filing. If it determines that the charges are legitimate, it should also explain this to you within the same timeframe. While the dispute is pending, you need not pay the disputed amount.

In case you are not happy with your card issuer’s decision, you could file a complaint with your state attorney general’s office. The Consumer Financial Protection Bureau is another outlet for such complaints.

As a last resort, you can even sue the card issuer. Be aware, though, that you may have unwittingly signed away your rights to suing your card issuer (based on the fine print of the agreement you signed at the time you opened your card account), and you may only be able to avail of mandatory arbitration under terms that tend to be favorable to the issuer.

Contact me at pthangavelu@redventures.com with your credit card-related questions.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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