What Should I Do If I See an Unauthorized Transaction on My Credit Card?

Discovering an unauthorized transaction on your credit card can be alarming, but taking swift and appropriate action can help you minimize potential losses and resolve the issue efficiently. In this comprehensive guide, we’ll discuss the steps you should take, how to prevent future fraudulent activity, and what rights and protections you have as a cardholder.

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1. Understanding Unauthorized Transactions

An unauthorized transaction occurs when a purchase, withdrawal, or charge appears on your credit card statement that you did not make, approve, or recognize. These transactions may result from:

• Credit card fraud (e.g., stolen card details used for online purchases)

• Cloning or skimming (card details copied and used to create counterfeit cards)

• Hacked online accounts (saved card details used for purchases)

• Errors or billing mistakes (merchants charging you incorrectly)

• Subscription scams (recurring charges from hidden terms in a free trial)

Regardless of the cause, unauthorized transactions should be reported immediately to prevent further losses.

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2. Steps to Take When You Notice an Unauthorized Transaction

A. Verify the Transaction

Before panicking, confirm that the charge is truly unauthorized. Consider the following:

1. Check for unfamiliar merchant names – Some businesses use different names on credit card statements.

2. Look at the transaction date – Ensure that a family member or authorized user did not make the purchase.

3. Review past transactions – A forgotten subscription or membership renewal might be the cause.

4. Contact the merchant – If you suspect an error, reaching out to the company first may resolve the issue.

If you still do not recognize the charge, proceed with the next steps.

B. Contact Your Credit Card Issuer Immediately

Once you confirm that a transaction is fraudulent, contact your credit card issuer’s fraud department. Most banks provide 24/7 customer service for fraud-related issues.

• Use the number on the back of your card or visit your bank’s website.

• Report the transaction and provide details such as the amount, date, and merchant.

• Request a temporary freeze on your card to prevent further unauthorized use.

Your bank may cancel your current card and issue a new one with a different number for added security.

C. Dispute the Charge

Most credit card companies allow you to dispute unauthorized transactions. The dispute process usually involves:

1. Filing a dispute online or via phone – Many issuers allow you to dispute transactions through their website or mobile app.

2. Providing supporting evidence – If applicable, submit receipts, transaction records, or communications with the merchant.

3. Waiting for resolution – The investigation may take a few weeks. If your claim is valid, the amount is refunded to your account.

Under the Fair Credit Billing Act (FCBA) in the U.S., you are not responsible for more than $50 of fraudulent charges, and most issuers waive this amount entirely if you report the fraud promptly.

D. Monitor Your Account for Additional Fraudulent Activity

• Check your account daily for any new unauthorized charges.

• Enable transaction alerts via email or SMS to receive instant notifications.

• Review your bank statements for at least the next few months to ensure no other fraudulent transactions occur.

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3. Preventing Future Unauthorized Transactions

A. Protect Your Card Information

• Never share your credit card details over the phone, email, or text.

• Use virtual credit cards or disposable card numbers for online purchases.

• Enable two-factor authentication (2FA) for online transactions where available.

B. Use Secure Payment Methods

• Avoid public Wi-Fi when making online purchases.

• Use secure payment processors like PayPal, Google Pay, or Apple Pay.

• Shop only from reputable websites that use HTTPS encryption.

C. Regularly Update Your Security Settings

• Change your passwords frequently, especially for online banking and shopping accounts.

• Monitor saved payment details in online stores and remove unnecessary ones.

• Set spending limits for your card if your issuer provides that feature.

D. Watch Out for Phishing Scams

• Be wary of emails or calls claiming to be from your bank requesting personal or card details.

• Avoid clicking on suspicious links in emails or text messages.

• Verify with your bank directly before responding to any urgent security requests.

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4. What Happens After You Report an Unauthorized Transaction?

Once you notify your credit card issuer of the fraud, the following typically occurs:

1. Temporary Credit Issued – Your issuer may provide a provisional credit for the unauthorized amount while investigating.

2. Investigation Begins – The bank reviews the transaction details and contacts the merchant if needed.

3. Resolution Timeline – Most investigations conclude within 30 to 90 days, depending on the complexity.

4. Final Decision – If the transaction is deemed fraudulent, you won’t be liable, and the charge will be permanently removed.

During this time, you should continue monitoring your account and report any additional suspicious activity immediately.

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5. What to Do If the Bank Denies Your Dispute

If your bank determines that the charge was not fraudulent, you may:

• Ask for a reconsideration – Provide any additional evidence supporting your claim.

• Contact the merchant directly – Some merchants may offer refunds even if the bank denies your claim.

• Escalate to a higher authority – You can file a complaint with financial regulatory bodies such as:

  • Consumer Financial Protection Bureau (CFPB) (U.S.)

  • Financial Ombudsman Service (U.K.)

  • Your local banking regulatory authority

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6. How Different Banks Handle Unauthorized Transactions

Most major credit card issuers have robust fraud protection policies. Here’s how some popular banks handle unauthorized charges:

• Chase, Capital One, American Express – Offer zero liability protection, meaning you won’t pay for unauthorized charges.

• Bank of America, Wells Fargo, Citi – Provide real-time fraud alerts and allow disputes through their mobile apps.

• Discover, Barclays, HSBC – Issue replacement cards within 24-48 hours after reporting fraud.

It's always good to check your bank’s specific fraud policies to understand your rights.

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7. Conclusion

Unauthorized credit card transactions can be stressful, but acting quickly can help you avoid financial loss. The key steps to take include:

1. Verify the transaction to ensure it is truly unauthorized.

2. Contact your bank immediately and report the fraud.

3. Dispute the charge and follow up on the investigation.

4. Monitor your account for further suspicious activity.

5. Take preventative measures to avoid future fraud.

By staying vigilant and following best security practices, you can protect your credit card from fraud and ensure your financial information remains safe.