Unauthorised credit card transaction

How to reverse unauthorised credit card transactions

Information verified correct on December 5th, 2016

Learn how to protect yourself against unauthorised credit card transactions.

Whether it’s due to card theft, account hacking or perhaps even simply a glitch in payment processing, unauthorised 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. This guide will tell you everything you need to know about unauthorised transactions and how to prevent them.

What is an unauthorised credit card transaction?

Unauthorised transactions are payments made by someone else using your credit card account without your approval or knowledge. There are two 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 twice 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 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.

Tips to avoiding unauthorised credit card transactions

These 10 tips will help you minimise the risk of an unauthorised credit card transaction:

  1. Review your credit card transactions. If an unauthorised 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 unauthorised transactions. Should you find any, call your credit card provider to prevent any more activity on the card.
  2. Don’t share your PIN or other card details. Under the Australian Securities & Investments Commission (ASIC) consumer protective ePayments Code, you will not be able to get your money back if you don’t keep your PIN or password secret. The onus therefore remains on you to protect your personal card details, even from loved ones.
  3. Only make payments through secure services. This relates to online payments, where you should only transact on web URLs beginning with “https” that show a locked padlock symbol. It also applies to your Internet connection, which means you shouldn’t transact when using public connections such as free Wi-Fi networks in cafes or airports. These networks are less secure than private, password-protected connections and increase the risk of hacking.
  4. 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.
  5. 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 criminal 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.
  6. Look for signs of tampered devices. This relates to credit card skimming and is very important at ATMs and stores where you’re using your card. A good practice is to look out for irregularities when at the ATM, particularly for machine parts that look odd, overly new or that are loose. When paying in a store, make sure your card stays within sight and only gets swiped once. Always shield your PIN when entering it.
  7. Report lost or stolen cards. Immediately reporting a lost or stolen credit card reduces the window of opportunity for any unauthorised transactions to be made. 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, CommBank’s NetBank service and mobile app lets you temporarily lock your card to prevent unauthorised charges.
  8. 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 unauthorised transactions, especially if the card is enabled for contactless payments.
  9. Contact the merchant if there is a processing error. Contact the merchant as soon as you realise there’s been an issue with payment. 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 the person serving you and/or the 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.
  10. 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 it’s an unauthorised charge from a merchant you’ve done business with, they may advise you to resolve it directly. However, where it’s fraudulent or not possible to reverse the transaction via the merchant, your credit card issuer will launch an investigation and guide you through the resolution process.

Other forms of protection against unauthorised 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. This is why you should always inform your card provider before going overseas, because 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 also needs to know your PIN in order to use it (except for payWave and PayPass transactions below $100).
  • Verified by Visa. This 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 Verified by Visa 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 unauthorised charges made on your account. American Express also offers a Fraud Protection Guarantee that means you won’t pay for unauthorised 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.

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. Now that you’re more aware of the possible risks, following the above tips will help safeguard your credit card account from unauthorised transactions and other related issues.

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