Frequently Asked Questions About Liability for Unauthorized Credit Card Use (TILA § 1643)

TILA § 1643 is the federal statute that limits your liability for unauthorized use of your credit card. Under this provision of the Truth in Lending Act, a cardholder’s liability for unauthorized charges is capped at $50—and in many cases, your liability may be zero.

This protection applies regardless of how much the unauthorized user charged to your card. Whether the fraudulent charges total $500 or $50,000, your maximum exposure under TILA § 1643 is $50, provided certain conditions are met.

Under TILA, “unauthorized use” means use of a credit card by a person, other than the cardholder, who does not have actual, implied, or apparent authority for such use, and from which the cardholder receives no benefit.

Both elements matter. The use must be by someone without authority, and you must not have received any benefit from the transaction. If you authorized someone to use your card for a specific purpose and they exceeded that authority, the analysis becomes more complicated (see below).

Both TILA § 1643 and the Fair Credit Billing Act (FCBA) protect consumers against credit card fraud, but they are focused primarily on different questions.

TILA § 1643 is focused primarily on who bears the loss when a credit card is used without authorization. It caps your liability at $50 and places the burden of proof on the card issuer.

The FCBA is focused primarily on the dispute process—what happens when you notify your card issuer of a billing error (which includes unauthorized charges). It requires the issuer to acknowledge your dispute, conduct a reasonable investigation, and resolve the matter within specific timeframes.

The statutes also have different procedural requirements:

TILA § 1643: Flexible notification. No writing requirement, no special address, no 60-day deadline. You simply need to notify the card issuer through reasonable means.

FCBA: Stricter requirements. Your dispute must be in writing, sent to the card issuer’s designated billing dispute address (not the payment address), within 60 days of the statement containing the error. The issuer must then respond within two billing cycles (but no more than 90 days).

Both statutes may apply to the same set of unauthorized charges, but they impose different requirements and provide different remedies.

For your liability to be capped at $50 under TILA § 1643, certain conditions must be met:

The card must be an “accepted credit card.” This means a card that the cardholder has requested or applied for and received, or has signed, used, or authorized another person to use.

The card issuer must have provided adequate notice. The issuer must have given you a description of a means by which you can notify them of loss or theft of the card.

The card issuer must have provided a means of identification. The card must contain or be accompanied by a method for identifying the authorized user (such as a signature panel, photo, or PIN).

The unauthorized use must occur before you notify the card issuer. Once you notify the issuer that unauthorized use has occurred or may occur, you have no liability for subsequent unauthorized charges.

If the card issuer fails to meet any of these conditions, you may have zero liability—not just a $50 cap.

Unlike the FCBA, TILA § 1643 does not impose rigid notification requirements. You do not need to send a written dispute to a special address within 60 days.

Under TILA, the card issuer is considered notified “when such steps as may be reasonably required in the ordinary course of business to provide the card issuer with the pertinent information have been taken, whether or not any particular officer, employee, or agent of the card issuer does in fact receive such information.”

In practical terms, this means that calling your card issuer’s customer service line, reporting through their app, or otherwise communicating the fraud in a reasonable manner should be sufficient to trigger your protections under TILA § 1643.

That said, we always recommend following up any phone or electronic report with a written dispute sent by certified mail. Written documentation creates a clear record and may also preserve your rights under the FCBA.

The burden of proof is on the card issuer—not on you.

Under TILA § 1643(b), in any action by a card issuer to enforce liability for the use of a credit card, the card issuer must prove that the use was authorized, or, if the use was unauthorized, that the conditions for imposing liability (up to the $50 cap) have been met.

This is significant because it means the card issuer cannot simply assert that a charge was authorized and demand payment. If you dispute a charge as unauthorized, the issuer bears the legal burden of proving otherwise.

If a card issuer attempts to hold you liable for more than $50 in unauthorized charges—or violates other provisions of TILA—you may be entitled to damages under TILA § 1640:

Actual damages: Compensation for any actual financial harm you suffered as a result of the violation.

Statutory damages: For individual actions involving open-end credit not secured by real property, you may recover twice the amount of any finance charge in connection with the transaction, with a minimum of $500 and a maximum of $5,000—or a higher amount if you can show an established pattern or practice of such failures.

Attorney’s fees and costs: A prevailing consumer is entitled to recover reasonable attorney’s fees and court costs.

The availability of statutory damages and fee-shifting makes it possible to bring TILA claims even when actual monetary losses are modest.

This is a common scenario—you give your credit card to a family member, employee, merchant, or service provider for a specific purpose, and they use it for unauthorized purchases.

Remember that TILA defines “unauthorized use” as use by a person who “does not have actual, implied, or apparent authority” and from which the cardholder receives no benefit. The question in these cases is whether the person who exceeded their authority can be said to have had “apparent authority” for the additional charges.

Merchant or service provider misuse: If you gave your card to a merchant or service provider for a specific transaction and they charged additional amounts without your consent, you are likely protected by TILA § 1643. Courts have recognized that it “would strain credulity” to assume that giving your card to a merchant creates a principal-agent relationship making you liable for any and all charges. No court has held that the cardholder-merchant relationship establishes apparent authority for charges beyond what the cardholder authorized.

Family member or employee misuse: While, in many cases, a consumer who gives his or her card to a family member who misuses it will not be protected by TILA § 1643, the rule is not categorical and depends on whether the third party can be said to have “apparent authority.” Courts have declined to adopt a bright-line rule that voluntary relinquishment of a credit card for one purpose automatically creates apparent authority for all other charges.

If you have been held liable for charges that exceeded the authority you granted, consult with an attorney to evaluate whether you may have a claim under TILA.

No. TILA § 1643 applies only to credit cards. Debit cards and other access devices linked to deposit accounts are governed by a different statute: the Electronic Fund Transfer Act (EFTA).

The EFTA provides similar protections for unauthorized transfers from bank accounts, but with different liability limits and timing requirements. If you have experienced unauthorized debit card charges or electronic transfers from your bank account, see our FAQ on payment platform fraud.

If you’ve reported unauthorized charges to your card issuer and they’re still holding you liable—or if they’ve failed to properly investigate your dispute—we can help.

Schlanger Law Group represents consumers nationwide in TILA and FCBA litigation. We regularly handle cases where card issuers have failed to honor their obligations under the law, including improperly denying fraud claims, failing to conduct reasonable investigations, and attempting to collect on unauthorized charges.

If you are the victim of unauthorized credit card charges and your card issuer won’t remove them, contact us for a free consultation.