How to stop unauthorized credit card charges

Whether it’s due to card theft, account hacking or perhaps even a glitch in payment processing, unauthorized credit card transactions are certainly something you want to avoid. While there are fraud protection policies in place to help safeguard you against such events, there are instances when you may become liable for the losses arising from such transactions.

What to do when you think your credit card is compromised

After the initial stress of finding out unauthorized charges on your credit card account, take a deep breath and calm down. Everything can be resolved.

1. Lock your card. Some cards let you lock or freeze your credit card online or through your mobile app. If this is a possibility — use it.
2. Call your credit card provider. If your card is physically present, call the number on the back of it. Otherwise, look for a contact number on your credit card statement or online. Credit card providers have zero liability policies through which you’re not held liable for unauthorized charges you report to your card issuer.
3. Review your credit card transactions. Make sure you note all transactions you didn’t make. You can also check your other credit card transactions (from other cards and/or previous statements) to make sure they aren’t compromised as well.
4. Change your password and PIN. Proceed to change your password and credit card PIN to prevent additional unauthorized charges.
5. Call the credit bureaus. If multiple credit card accounts are compromised, call the credit bureaus. In this case, you may also call the police and file a report — especially, if you suspect identity theft.

More tips for avoiding unauthorized credit card transactions

These 10 tips will help you minimize the risk of an unauthorized credit card transaction:

• Monitor your credit card transactions.
  If an unauthorized transaction is made, it will show up on your credit card account and statement. Take the time to review your statement details regularly and be on the lookout for any unauthorized transactions. Luckily, most card issuers will notify you if they suspect fraudulent activity.

• Keep your PIN or other card details safe.
  You may not be able to get your money back if you’re careless with your PIN or password.

• Only make payments through secure services.
  You should only conduct online payments on websites that have “https” at the beginning of the URL along with a locked padlock symbol. Also, you shouldn’t use your card when using public connections such as free Wi-Fi networks in cafés or airports. These networks are less secure than private, password-protected connections, and the risk of hackers accessing your data is higher.

• Get up-to-date antivirus software.
  Stay protected with anti-spyware and antivirus software, especially if you often transact over the Internet. This will protect your accounts from online hacking.

• Be prudent on the Internet.
  Many online accounts and services now suggest you store your credit card details for ease of payment. The problem is that some of these services hold enough personal details about you for a hacker to be able to steal your identity.
  This makes it important to protect your accounts by limiting the information you provide and using complicated and varied passwords. Practice safe email protocol, and don’t open messages from unknown senders.
• Look for signs of tampered devices.
  This relates to credit card skimming and is very important at ATMs and stores where you use your card. Look out for irregularities when at the ATM, particularly for machine parts that look unusual, are loose or that look overly new compared to the parts surrounding it. When paying in a store, make sure your card stays within sight and only gets swiped once. Always shield your PIN from others’ view when entering it.

• Report lost or stolen cards.
  Immediately reporting a lost or stolen credit card reduces the window of opportunity for anyone to make any unauthorized transactions. It’s also one of the criteria for fraud protection.
  Even if you think you’ve simply misplaced your card, call your credit card company to inform them so they’ll keep a close eye on your account. You may even be able to freeze your account while looking for your card. For example, Tangerine lets you temporarily freeze your credit card online to prevent unauthorized charges.

• Keep track of when a new card should arrive in the mail.
  If you’ve applied for a credit card or your old one has expired, make sure you regularly check your mailbox to ensure you receive your new card on time. This will alert you to mail theft that could lead to unauthorized transactions, especially if the card is already enabled for contactless payments.

• Contact the merchant if there is a processing error.
  This will speed up the resolution process if a transaction has been made by mistake. If you’re in-store when it happens, talk to an employee or manager to see if they can reverse the transaction on the spot. If you’re online, contact customer service so that they can look into it as quickly as possible.

• Contact your credit card issuer about anything suspicious.
  The rule of thumb is to inform your card issuer about any suspicious activity as soon as you possibly can. If the problem is an unauthorized charge from a merchant you’ve done business with, they may advise you to resolve it directly. However, if it’s fraudulent or not possible for the merchant to reverse the transaction, your credit card issuer will launch an investigation and guide you through the resolution process.

What is an unauthorized credit card transaction?

Unauthorized transactions are payments made by someone else using your credit card account without your approval or knowledge. There are 2 ways this can happen:

• Processing errors.
  Processing errors occur when you’re making a payment and is usually the result of technical issues with the payment service or Internet connection. For example, you could accidentally be charged 2X for something because of a faulty connection, software glitch or because you reloaded a payment page while shopping online.
  Note that processing errors can occur both through merchants and through credit card issuers. In most cases, you should be able to reverse the charge by contacting the merchant or your credit card issuer directly.

• Fraudulent transactions.
  Fraudulent transactions are intentional and illegal, and they result from criminal activity that occurs when your credit card account has been compromised. A clear example of credit card fraud is if your card is physically stolen and the thief uses it to make a purchase.
  Similarly, if your card details are stolen through online hacking, that would be considered fraudulent too. In most cases, you will be refunded the full amount of a fraudulent transaction after contacting your credit card company and having them investigate the incident.

Other forms of protection against unauthorized transactions

These are the default forms of protection available to consumers, depending on your card type:

• Fraud monitoring services.
  Most card companies have internal systems in place to prevent card fraud. This includes sophisticated software and analytics teams that monitor your credit card transactions, who will contact you if they see unusual activity on your account.
  If you don’t inform your card provider before going overseas, they may freeze your account if their fraud-monitoring team thinks that someone has stolen your card and is using it abroad.

• Chip technology.
  Credit card chip-and-PIN technology offers you greater protection because anyone who steals your card will also need your PIN to use it.

• Verified by Visa.
  Also known as Visa Secure, is an extra layer of security for Visa cardholders when transacting online with participating merchants. When making payments through the service, a one-time password is sent to your mobile phone to verify your identity and protect your card from use by card thieves.

• Mastercard SecureCode.
  This is similar to Visa Secure and is the process whereby Mastercard holders receive a security code on their mobile phones that they need to key in to verify online transactions.

• Zero liability. Both Visa and Mastercard have Zero Liability policies that free you from liability for unauthorized charges made on your account. American Express also offers a Fraud Protection Guarantee that means you won’t pay for unauthorized spending on your card. While the terms and conditions vary slightly for each company, all these policies cover card loss, card theft and card fraud both online and offline.

Related: Compare credit cards in Canada

How to dispute a fraudulent credit card transaction

Whether the fraudulent charge was made by a billing error because you received damaged goods or poor quality service, contact the merchant to try to resolve the issue. If they don’t want to cooperate, you can request a chargeback from your card issuer.

To get a chargeback, the following requirements must be met:

• The cost of disputed goods or services must be $50 or higher.
• You have disputed the transaction within any time limit set by your provider (often 30-60 days)
• You tried to resolve the dispute with the merchant first.

Bottom line

Even though consumer protection laws strongly insure you against unfortunate events like card loss, theft and fraud, you’re better off avoiding these issues when you can.

To learn more, check out our guide on how to avoid credit card fraud, traps and scams.