How to Spot and Dispute Fraudulent Credit Card Charges
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A fraudulent charge can happen when you least expect it and possibly at the most inconvenient time. If you’re not in the habit of checking your credit card accounts, it may be a while before you even notice that anything is amiss.
You likely won't be financially responsible for credit card fraud, but you still must be able to identify it and report it to your issuer.
Here's how to detect such charges quickly and dispute them efficiently for a resolution.
How to detect credit card fraud
The best way to detect credit card fraud is to stay on top of your account. Review your statement every month for unauthorized transactions. Checking your account periodically online can alert you to suspicious activity even faster, catching fraudulent purchases while they're still pending.
You can also make it easy on yourself by setting up credit card alerts for every card in your wallet, via your card issuer's mobile app or website.
When you do, you can generally elect to be notified by text or email for a variety of transactions, including:
“Card not present” transactions, such as online purchases.
Transactions that exceed a designated amount.
Such alerts can help you more easily spot suspicious activity and minimize the potential of accidentally glossing over a charge on your credit card statement.
How to distinguish between fraud and simple error
Once you detect an unauthorized transaction, determine whether it's fraud or a billing error. Sometimes it's just a simple mistake.
If, say, you're accidentally double-charged by the same store, you might be able to resolve the issue quickly by taking it up with that merchant first. For charges that you don't recognize, try Googling the name of the merchant on your credit card statement to see whether it does business under a different name. If you share the account with joint cardholders or authorized users, ask them if they made the questionable transaction.
Once you go through these steps and determine that a transaction is fraudulent, report it to your credit card issuer.
Don't panic if you stumble upon fraud on your credit card statement. Under the Fair Credit Billing Act, you're not responsible for unauthorized charges made on the internet. For other fraudulent transactions, federal law limits your liability to $50 as long as you report them to your credit card issuer. On top of this, most major credit card issuers offer zero-liability fraud policies, so you likely won't owe any amount at all.
How to report credit card fraud
Calling your issuer is a great first step to alert them to any fraud that's taken place on your account. In many cases, it may be possible to resolve the matter quickly that way.
The next strongly recommended step is to document the conversation in writing, which will further protect you from any liability. Let your credit card issuer know over the phone that you’ll be following up with a written letter. By communicating with your credit card issuer in written form, you’ll have proof that you did your part to quickly report unauthorized charges.
If the thought of writing a letter is intimidating, consider using the Federal Trade Commission's sample letter as a starting point and tailoring it to fit your own case.
The letter should be sent to the address for billing inquiries, not the address that receives payments by snail mail. It should include your name, account number and a description of the unauthorized transaction. Also, it helps to enclose copies of any documents that may support your claim. Feel free to include any next steps or updates previously discussed over the phone with your issuer. And keep a copy of everything you’re mailing for your own records.
Send the letter so that it reaches your credit card issuer within 60 days from when the bill containing the questionable charge was mailed to you. You can track the letter by sending it via certified mail and ask for a return receipt for confirmation that the card issuer received it.
Unless the matter is resolved, your credit card issuer has to confirm that it received your letter in writing within 30 days of receiving it.
What to expect from the credit card fraud investigation
The credit card issuer will be interested in preventing further unauthorized charges on your account, so it may decide to freeze or cancel your credit card and send a replacement. If you get a new credit card number, you may need to change it wherever you have it stored as a payment for goods and services.
While the investigation is pending, you’re not required to pay the disputed amount or charges accrued. Credit card issuers can't take legal actions or send your bill to collections while the amount in question is investigated. You will, however, be required to pay the portion of your bill that belongs to you.
By law, the dispute must be resolved within two billing cycles (no more than 90 days) after receiving your letter. The issuer must notify you in writing about its findings and next steps.
If the issuer determines that a transaction is fraudulent, it must credit your account for the amount disputed and remove any charges resulting from the transaction. If the issuer determines the transaction is correct, you’re responsible for paying the disputed amount and any charges resulting from it.
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