What to do if you spot a fraudulent credit card charge

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You're doing a regular scan of your credit card statement and find a charge for something you didn't purchase. What should you do?

Don't worry, but do call your credit card issuer.

Zero-liability protections
"All bank-issued credit cards do have a zero-liability policy, which basically says that if your card is compromised by fraudulent means, you will not be liable for the cost of the fraud," says Andrew Perez, manager of media relations and communications with the Canadian Bankers' Association (CBA).

However, that protection comes with some stipulations. For instance, you must report the fraud as soon as possible.

"When it comes to reporting fraudulent charges, the earlier it is reported, the easier it is to investigate," Brent Reynolds, managing vice president at Capital One, said in an emailed response to questions. "Fraudulent charges can be investigated as long as they have been reported in a reasonable amount of time."

What constitutes a reasonable time frame is determined on a case-by-case basis. On its website, the Financial Consumer Agency of Canada (FCAC) states: "In some cases, you may need to report an incident within a specific amount of time. If not, you may not get the full amount back."

Monitoring your credit card statements online will help you find questionable charges sooner. Your credit card issuer may offer other account monitoring tools, such as real-time alerts for potentially fraudulent transactions.

"Banks have security teams working around the clock and are often able to identify when fraud has taken place before the customer is even aware," says Perez. "If fraud is suspected, the bank can actually reach out to the consumer to confirm if the transaction was legitimate or not."

"Capital One also offers a feature called Second Look, which flags potentially suspect transactions, such as double charges and increases in subscription fees, that are easy to miss," said Reynolds.

Check with your credit card issuer to see what fraud-detection features it offers.

Zero-liability exceptions
There are a couple of situations in which zero-liability protection may not apply.

"The two exceptions would be if the individual willingly lends their card or shares their PIN with another individual," says Perez.

A recent study conducted by Capital One Canada found that 40 per cent of Canadians admit to sharing their PIN with family, and 25 per cent of millennials admit to sharing their PIN with friends, said Reynolds. "Your PIN should never be shared with anyone."

Banks also will hold you liable if your PIN is too easy to guess; e.g., it's your birthdate or "1234." Again, this would be determined on a case-by-case basis, but it's better to err on the side of caution.

"In terms of setting a PIN, there's a number of things that consumers can and should do to be vigilant and to protect their credit card information," says Perez. "Choose a PIN that could not be easily detected if your card is lost or stolen."

In addition, Reynolds said, "You should also use a different PIN for each card or account, and never write the PIN down on or near the card. When paying with a card or accessing an ATM, be sure to cover the keypad."

With the introduction of chip technology in 2008, using your credit card has never been safer.

"Since that time, we have seen a 76 per cent reduction in domestic fraud losses as a result of counterfeiting," Perez says.

Be proactive against card fraud
There are some guidelines for reducing the likelihood of card fraud.

"Canadians should protect their personal information by ripping up statements, avoiding sharing their personal information online and signing up for e-bills and e-statements," said Reynolds.

He also recommends checking your credit report annually and ensuring that there are no fraudulent credit card accounts or suspicious credit checks.

You should also take steps to protect yourself when shopping online.

"Make sure you're shopping with a reputable company," says Perez. "You wouldn't give information to just anyone in the offline world. This same judgment applies to the online world."

Online retailers often take precautions to protect your information as well. Ensure that the one you shop with takes one of these measures:

  1. Requests the security code on your card.
  2. Uses Verified by Visa or Mastercard Secure.
  3. Asks you to confirm the cardholder's mailing address.

In the event that your credit card is compromised, you have protections and will very likely not be liable for the charges. And, in the event that you are unsatisfied with your credit card issuer's investigation of your fraud claim, you can contact the FCAC to request further action.

"What's important to remember for consumers is banks have sophisticated security systems and fraud teams in place that are there to protect consumers," says Perez.

See related: Are credit monitoring services worth the cost?, How to avoid grey charges on your credit card
Published April 13, 2017

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