What to do when your bank won’t refund fraudulent charges

Getting your money back isn’t a guarantee, especially if you’re using a business card, but persistence could pay off


Business credit cards don’t have the same consumer protections as personal cards. So if you’ve reported fraudulent charges on a business credit card to your issuer, and it won’t refund you the money, you may need to be persistent.

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Dear Your Business Credit,

I have a small business credit card and recently had a lot of fraud charges.

I always had my cards in possession but the thief was able to get my numbers to make fraudulent online purchases even after the card was newly replaced. The bank over the phone said the claim was denied due to unusual fraud scenario, i.e. the card was used fraudulently even after the card was replaced.

The rep told me she didn’t hear back from the merchants but she was denying the claims. The rep also indicated that the three-digit security code was used on the transaction. However, upon calling PayPal, that wasn’t the case. (One of the charges was from PayPal and even the address was not complete).

I emailed to request a thorough investigation of the claims but received denial letters. On the denial letter, there is no breakdown of the charges and no proof of the investigation detail. Wouldn’t I be at least entitled to see details of the orders that were fraudulently charged (address, phone number/email and items ordered)?

I reported those charges as soon as I received an alert (I had alert setup whenever a charge is made).

I had filed with IdentityTheft.gov and just filed with CFPB.

I would like to know what my right is. Can I bring the bank to small claims court? I don’t want to pay for something that was fraudulent. But if I don’t pay for it, I will start to accumulate late charges and it will damage my credit.  What should I do? Any advice will be greatly appreciated! – Kate

Dear Kate,

It is a shame that a bank would make you jump through hoops like this when you are the victim of a fraud.

As to what you can do to protect yourself, I ran your question past Brian J. Crow, managing partner and co-president of TCA A Better Way, a firm that helps banks address their compliance obligations.

Your rights are governed somewhat by whether you used a consumer card or a business card.

As Crow noted, consumer credit cards are governed by the Truth in Lending Act and enforced by the CFPB via Regulation Z.

“If a financial institution investigates an assertion of a billing error and concludes that no error occurred Section 1026.13(f) requires that the creditor provide copies of documentary evidence upon receipt of a request from the consumer,” Crow wrote to me in an email.

Generally speaking, an investigation must occur within 10 business days, or 20 business days if an account has been open less than 30 days, according to the CFPB. The bank must correct an error within one billing day after the determination a billing error has occurred.

Check out all the answers from our credit card experts.

Ask Elaine a question.

Will you get your money back?

You may, but it’s no guarantee.

Under Regulation Z, if a creditor has conducted a “reasonable” investigation and determines that no billing error occurred or a different billing error took place than the one that was asserted, the creditor must mail or deliver the consumer an explanation that explains why the creditor believes the billing error the consumer has alleged is incorrect and, upon request, furnish copies of documentary evidence of the consumer’s indebtedness.

A reasonable investigation, according to Regulation Z, may include seven elements, including reviewing the purchases in comparison to the cardholder’s purchasing patterns, reviewing where purchases were delivered in relation to where the consumer normally shops and comparing any signature slips to the consumer’s signature. For the full list, check out the section of Regulation Z titled “Reasonable investigation.”

If the creditor has determined a different billing error occurred, it must correct the billing error and credit the consumer’s account with any disputed amount and related finance or other charges.

All told, the issue must be resolved within 45 days.

See related: How to dispute a credit card purchase

What if you used a commercial card?

Regulation Z does not apply to commercial accounts unless they have fewer than 10 employees, as noted in 1026.12(b)(5), Crow wrote.

If the card issuer has issued 10 or more credit cards for use by your employees, the business and the credit card issuer are allowed to agree to higher liability limits than those provided for in Regulation Z, he went on to explain.

“In other words, for business accounts, the cardholder agreement is the governing document under contract law rather than the Truth in Lending Act or Regulation Z,” he explained. “Often business agreements will include clauses which place liability on the business if the creditor suspects that the business was negligent in safeguarding card information (which the credit may conclude because of the proximity of the alleged fraud compared to the issuance of a new card) or it may have clauses that place full liability on the business regardless of how the charges occurred.”

It’s important to read the fine print to see what you agreed to.

“The business owner should carefully review the card agreement and may also request the assistance of legal counsel to determine if the creditor violated the cardholder agreement in any way,” Crow wrote. “While the business owner is free to sue the creditor for breach of contract, I’d recommend escalating the complaint through the appropriate channels of management.

“Since this complaint involves a business and not a consumer account, the CFPB may or may not provide assistance, but filing that complaint with the creditor’s primary regulator was also an appropriate step,” he added.

See related: How to dispute fraudulent charges on a corporate credit card

Bottom line

With issues like this, sometimes persistence can go a long way. If the dollar amount of the fraud is substantial, it’ll be worth it to put in the effort, given all the work you’ve already done. Good luck!

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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