When your child uses your credit card without permission

Learning that someone has swiped your credit card information to pay for nights at a swish hotel in Dubai is more than a little unsettling. Learning your own child has taken your card to amass thousands of dollars' worth of online video game add-ons might feel even worse.

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And it happens. Although many people think of organized crime networks when they hear about credit card theft, family members also perpetrate fraud.

So what should you do if one of your kids has taken your card to make purchases? First, know that fraud is fraud, no matter who is doing the deed. According to Visa Canada, cardholders are protected by zero liability policies that cover lost, stolen and counterfeit card fraud. If a card is stolen and used without a cardholder's permission, the wronged person is not held responsible.

Yet, there are caveats to this rule, which can make for some sticky situations once fraud is uncovered.

"Cardholders do have a responsibility to protect their card as outlined in their cardholder agreement; this includes not sharing their PIN," says Gord Jamieson, head of payment system risk for Visa Canada. In other words, if you give your 16-year-old son your PIN in September to order a new laptop for school, but he holds onto the PIN and charges $600 worth of clothes without permission in April, there's a chance you'll have to pay up.

If your child has somehow managed to take your card and PIN without permission, however, there are steps you'll want to take to get your money back -- and teach a few lessons along the way.

1. Let the card issuer know.
If you notice that purchases have been made using your card, inform the credit card issuer right away so it can freeze the account. You'll then have time to find out who took your information. Once you know, you can decide if you want to ask the issuer to reverse the charges.

2. Find out who, what and how much.
Let's face it, a 15-year-old stealing a parent's or grandparent's card to buy a new iPod is different from a 7-year-old who inadvertently racks up $8 in iTunes charges to pay for a few songs. (Always make sure your phone or tablet settings are such that you must input your PIN for each purchase.) Young children are also still learning right from wrong and can be impulsive.

As a parent, it's your job to explain why using your card, or making purchases without your permission, hurts someone: you. In the case of your teen, consequences should be relevant to the crime. If your teen has stolen a physical object, return it. If he's bought virtual objects for online games, you can't give them back, but you can alert the company that sold them and shut your child out of the game. Again, you may be able to make a case to have the charges reversed.

3. Decide if it's worth it to call police.
Look at the whole picture. Alerting authorities on a young child probably doesn't make sense. But if your teen has stolen from you more than once or in large amounts, making that phone call might make the seriousness of the offense hit home. Also, in some situations, you will need a crime reference number from the police to have charges reversed.

4. Don't let it happen again.
One of the best ways to keep kids on the straight and narrow is to not allow temptation to enter the picture in the first place. So stash your credit cards in a secure place and keep your PIN secret. It's also a good idea to examine your monthly statements and order your credit report from Equifax or TransUnion at least once per year to be on the lookout for fraud no matter who's behind it.

See related: Do's and don'ts of joint credit, Avoiding authorized user nightmares
Updated November 15, 2016

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