What Recourse Exists for Unauthorized Charges on a Credit Card?

If you notice unauthorized charges on your credit card, it's crucial to act quickly to protect your finances and prevent further fraudulent activity. Credit card companies offer legal protections and procedures to resolve these types of issues, but you must take the right steps to ensure you aren't held liable for the unauthorized charges.

Steps to Take If You Notice Unauthorized Charges on Your Credit Card

1. Review Your Credit Card Statement:
   The first step is to carefully review your credit card statement or online account to identify any charges you don't recognize. Sometimes, fraudulent charges may be small or disguised as legitimate purchases, so be thorough when reviewing your transactions.
2. Contact Your Credit Card Issuer Immediately:
   As soon as you spot an unauthorized charge, contact your credit card issuer or bank immediately. Most issuers have a 24/7 fraud hotline specifically for reporting unauthorized transactions. Let them know that you believe your card has been compromised and that you do not recognize the charge(s).
3. Dispute the Unauthorized Charge:
   After notifying your issuer, initiate a formal dispute for the unauthorized charges. Under the Fair Credit Billing Act (FCBA), consumers have the right to dispute unauthorized charges within 60 days of receiving the billing statement containing the error. The issuer is required to investigate the dispute, and during the investigation, you should not be held liable for the disputed amount.
4. Provide Necessary Documentation:
   When disputing unauthorized charges, you may be asked to provide documentation or details surrounding the transaction(s) in question. This can include a written statement explaining why the charge is unauthorized, as well as any evidence (such as emails or police reports) that can support your claim.
5. Monitor Your Account and Account Statements:
   Continue to monitor your credit card account and subsequent statements for any further unauthorized activity. If necessary, request a change in your account number or have your card reissued to prevent further fraud.
6. Consider Filing a Fraud Report:
   If the unauthorized charge is substantial or involves identity theft, file a report with the Federal Trade Commission (FTC) through IdentityTheft.gov. You may also want to file a police report, especially if you suspect the fraud is part of a larger scam or if your personal information has been stolen.
7. Check Your Credit Report:
   Unauthorized credit card charges can sometimes indicate identity theft or other fraud. To monitor for any further fraudulent activity, request a free credit report from each of the three major credit bureaus—Equifax, Experian, and TransUnion. Consider placing a fraud alert on your credit report if you believe your personal information has been compromised.
8. Understand Your Liability:
   Under U.S. law, you are generally not responsible for more than $50 in unauthorized charges if you report the fraud promptly. If you report the fraud within two days of discovering it, your liability is limited to $50. If reported within 60 days, you could face higher liability, but in practice, many credit card companies offer zero liability policies that waive any charges associated with fraud.
9. Take Steps to Protect Against Future Fraud:
   Once the unauthorized charges are resolved, take proactive steps to protect yourself against future fraud. This includes regularly monitoring your credit card statements, setting up alerts for any new transactions, using stronger passwords for online accounts, and considering credit card fraud protection services or identity theft protection services.

Example:

Suppose you notice a $500 charge on your credit card for a hotel stay in a city you've never visited. Here's what you should do:

• Immediately call the credit card issuer to report the fraudulent charge and dispute it.
• Provide any supporting evidence that you did not make the purchase, such as receipts or travel records showing you were not in that location.
• The credit card issuer may investigate and remove the charge while they process the dispute, and you may be issued a temporary credit while the matter is resolved.
• If the fraud is part of a larger identity theft issue, file a fraud report with the FTC and consider a police report if needed.

Conclusion:

Unauthorized charges on a credit card can be a frustrating experience, but consumers have legal protections in place to dispute these charges and limit their liability. By promptly contacting your card issuer, disputing the charges, and following the proper steps, you can resolve the issue and protect yourself from further fraud. Remember that under the Fair Credit Billing Act (FCBA), you have strong consumer rights to address unauthorized charges, and credit card companies typically offer zero liability policies to provide added peace of mind.