I Found Unauthorized Credit Card Charges. What Can I Do?

Has this happened to you? You’re reviewing your monthly credit card statement or scanning your activity online and you find transactions you don’t recognize. Maybe the vendor is in a foreign country, or you’ve never heard of the company. When you find unauthorized credit card charges, do you know what to do? First, it’s critical to keep track of your credit card account and the transactions charged to you. Frequent online checks are best for early detection, but at a minimum, you should carefully review every transaction in your regular monthly statement.

How Can Unauthorized Credit Card Charges Happen?

An unauthorized charge is defined as any transaction performed by someone else without your permission. Examples of unauthorized credit card charges include computer mistakes, clerical errors, stolen credit card use, and the growing problem of identity theft. Charges made by authorized card users are not covered by the law we will discuss here. With the increase in credit card theft, and to protect consumers from unfair billing practices and limit their financial liability, Congress passed the Fair Credit Billing Act (FCBA) in 1974.

Fair Credit Billing Act Basics

The FCBA affects consumers’ and credit card issuers’ rights and responsibilities. The Act defines credit billing errors, gives consumers the right to dispute unauthorized charges, and requires creditors to follow certain billing-related procedures.

What Types of Accounts are Covered by the FCBA?

The FCBA only applies to open-ended accounts including credit cards, revolving credit such as department store charge cards, and home equity lines of credit. The Act does not cover personal loans that have specific installment payments and a final due date.

What Consumer Rights are Established Under the FCBA?

Consumers who hold open-ended credit card accounts have the right to dispute billing errors in their account statement including:

Unauthorized charges of $50 or more,
Mistakes in a transaction date or amount,

Unknown or questionable charges—you can request more information to decide if you authorized the transaction in question, and
Charges for a product or service that you didn’t receive or was not as promised.

If you dispute a charge, you do not have to pay the amount in dispute or any related charges while an investigation is pending. However, you must still pay any undisputed charges in your statement.

What to Do if You Discover Unauthorized Credit Card Charges on Your Account

Again, the first step to reduce your losses is to review your credit card account often. At a minimum, carefully inspect your monthly statement in search of any unfamiliar charges, large or small. Often, an identity thief may charge a small amount (one dollar or less) to see if your account is active before attempting a larger charge.

Contact the Card Issuer ASAP

If you lost your card or suspect identity theft, call the card issuer as soon as possible. All credit cards have a phone number on the back of the card, or you can look at your statement for the dispute number to alert the company about any problems. Tell the company representative your name, account number, and which transactions you are disputing. Keep track of the person you speak with and the date you called. In lost card or identity theft situations, the company may close your account and issue a new card to prevent further unauthorized charges. For more details about what you should do if you are a victim of identity theft, learn these 24 ways you can minimize the impact of identity theft.

Follow Up in Writing and Include Any Supporting Documents

In all unauthorized charge situations, you should also send a written dispute letter to your card issuer within 60 days of the date of the periodic statement that included the disputed charge(s). You should do this even if you have already disputed the charge by phone. Include your name, account number, which transactions are in dispute, and send copies of any documents that support your claim of error. If you previously called about the problem, mention the person you spoke with and the date you called. The Federal Trade Commission (FTC) provides a sample dispute letter for you to follow when contacting your card issuers about unauthorized credit card charges. Send your written letter by certified mail with a return receipt requested. Keep a copy of your letter and any evidence you send.

What Must the Credit Card Company Do When You Dispute Unauthorized Credit Card Charges?

When the credit card issuer receives your dispute, it must acknowledge your complaint in writing within 30 days. Then it has two billing cycles—but not more than 90 days total—to investigate your claim. During the investigation, the credit card company cannot try to collect the disputed amount, charge interest on the disputed transaction, or report the non-payment to a credit reporting agency.

What Happens if I Win My Dispute?

If the card issuer determines that the charge in question was unauthorized, it must correct the error and remove the disputed charge from your account. Any interest or fees associated with the charge must also be refunded. This is called a “chargeback.”

What Happens if the Card Issuer Finds No Error?

If the company determines there was no error, it must explain its conclusion. The company must also supply any relevant documents if you request them. If you don’t agree with the outcome, you have 10 days to challenge the company’s decision. Then, the company must show on your account that you dispute the charge. However, the company can still try to collect the disputed amount.

What Are Your Legal Rights if a Credit Card Issuer Violates the FCBA?

A credit card company can violate the FCBA in many ways. For example:

The company may not perform a reasonable investigation, or it might not complete the investigation within 90 days,
Unauthorized charges may remain on your account,
You may not receive a chargeback when required,
The card issuer may not acknowledge your initial written dispute within 30 days,
The company may try to collect a disputed charge or report the charge as delinquent to a credit reporting agency during the investigation,
The card issuer may charge interest (or refuse to refund interest) to a charge that is found to be in error, or
The credit card issuer may take other actions that are prohibited by the Act.

A creditor that violates the FCBA cannot collect the disputed charge amount, late fees, interest, or any other related finance charges even if it turns out there is no error.

Other Federal Laws May Apply

In addition to the protections provided by the FCBA, consumers are also protected against unauthorized credit card use by Section 1643 of the Truth-In-Lending Act (TILA). While the FCBA focuses on the credit card issuer’s investigation, TILA looks at whether the charge was authorized. If the charge exceeds $50 and was unauthorized, the cardholder is generally not liable regardless of the card issuer’s investigation.

When You Find Unauthorized Credit Card Charges and the Card Issuer Doesn’t Follow the Law, Turn to Schlanger Law Group

Unfortunately, many credit card issuers are more interested in their bottom line than treating their customers well. Creditors often deny unauthorized use disputes even when they are promptly reported, and the accountholder provides detailed information and supporting documents. In these cases, finding an experienced credit card fraud lawyer to file a suit on your behalf may be the only way to achieve a fair result. Schlanger Law Group regularly advocates on behalf of victims of unauthorized credit card charges and often accepts these cases on a contingency basis. This is possible because the FCBA and TILA both require the credit card company to pay a consumer’s attorney’s fees and costs if the consumer wins. Don’t fall victim to unauthorized charges. Call (212) 500-6114 or fill out this simple form to schedule a no-cost, no-obligation case consultation today.