Understanding Unauthorized Credit Card Transactions

An unauthorized credit card transaction is a fraudulent purchase that the cardholder didn't authorize. This type of fraud is increasingly becoming common as fraudsters find new ways to exploit the system. In 2020, the global industries lost $28.65 billion in credit card fraud.

Cardholders are not liable for unauthorized charges made by credit card processors, but that doesn't stop the anxiety and stress of dealing with credit card scams. Let us show you how credit card issuers and users can avoid such fraudulent activity.


Early Detection: Unauthorized Credit Card Charges

Credit card theft is a serious problem affecting millions of people yearly. The Federal Trade Commission received 1.4 million reports of identity theft in 2021, including credit card fraud cases.

Thieves can obtain your credit card information through:

  • Skimming devices
  • Data breaches
  • Phishing scams

Once they have your information, they can use it to make fraudulent purchases or withdraw cash from your account.

The Fair Credit Billing Act is a federal law that protects consumers from fraudulent charges or card billing errors. The Act gives consumers 60 days to challenge any disputed amount, including those from website card processors.

Certain groups are more likely to fall victim to credit card fraud. Some of which include:

  • Seniors
  • College students
  • People with bad credit history

If you are in one of these groups, be extra careful and practice discretion when using your card. Ensure your purchases are from distinguished stores and sellers to avoid a careless billing error.

How To Report Unauthorized Credit Card Charges

Being the victim of unauthorized charges or fraud can be a stressful experience. But remember, you are not alone. Take these steps to protect yourself.

Step 1: Call your credit card issuer immediately.

They will be able to launch an investigation and, if necessary, refund the disputed amount.

Step 2: Monitor your account.

Keep an eye on your account and immediately report any suspicious activity to your bank or card issuer.

Step 3: Write a dispute letter.

Dispute the unauthorized transaction with written proof and describe your conversation with the customer representative and anyone else you've spoken with. It is the card issuer's responsibility to resolve the dispute within two billing cycles.

Step 4: Resolve the unauthorized charge with the merchant.

Credit card issuers may require you to contact the merchant who processed your card. However, fraudsters can spoof merchant details, especially in online transactions. In that case, only the bank can resolve the issue.

Step 5: Protect your rights.

You're not liable for unauthorized transactions as long as you have your physical credit card. You can, however, be held responsible for a maximum liability of $50, although most card issuers have zero fraud liability.

Tips On How To Prevent Credit Card Fraud

Getting your first card can be an exciting step into adulthood. However, it's important to remember that credit cards are a serious financial responsibility. Here are a few tips for first-time cardholders:

1. Read the terms and conditions of your card agreement carefully.

This document outlines your rights and responsibilities as a cardholder. It's essential to understand this information before you start using your card.

2. Avoid phishing scams.

A lot of scams involve unauthorized charges. Be careful with who you give your information. When you are asked for your credit card number or other personal information by someone claiming to be from your credit card company, do not provide it - hang up and call the customer service number on the back of your card.

3. Track your expenses.

Credit monitoring helps you avoid losing track of your spending. Keeping a running tally of your spending in a notebook or on your phone is a great way to do this. You'll be more aware of your credit accounts this way.

4. Review your monthly statements carefully.

Ensure that all charges are authorized. If you see any unknown costs, contact your credit card issuer immediately.

5. Pay off your balance in full every month if possible.

This will help you avoid paying interest on your purchases and better manage your expenses.

Frequently Asked Questions About Credit Card Payment Authorizations

Most people are anxious about giving their account numbers. They wonder if the company will keep their card information safe. Let's answer some of their frequently asked questions.

What is a credit card payment authorization?

A credit card payment authorization is when an individual gives a company permission to charge their card for a purchase. A fund request is routed through the card network. This request temporarily holds the specified amount of funds against the credit limit on the cardholder’s account.

How long does a credit card authorization last?

Typically, a credit card authorization lasts for 30 days. However, some issuers may allow authorizations to remain open for up to 60 days.

What happens if I have a pending authorization on my account?

A pending authorization indicates a request for funds from the merchant. Until the transaction is processed (usually within a few days), the funds will be held against your credit limit. Authorizations expire if funds are not used within the specified timeframe, and the funds are returned to your account.

Protect yourself from fraudulent charges by authorizing credit card payments. Follow the simple steps above to protect your payment information. To learn more about keeping your finances safe, read through our blogs at Processing Card.

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