How to get a refund for a fraudulent credit card transaction

Do you see a transaction on your credit card statement that you don’t recognize? If so, don’t ignore it. It could be a fraudulent transaction you didn’t authorize.

If you investigate and find that the transaction is indeed fraudulent, you enjoy certain protections as the credit card holder — including the ability to request a refund of the fraudulent charge from your card issuer. Here’s how to get a refund for a fraudulent credit card transaction on your account.

Confirm that the transaction is fraudulent

Before you reach out to your issuer about a potentially fraudulent transaction, take the time to determine that the transaction is actually fraud. Just because you don’t recognize a charge doesn’t necessarily mean that somebody is using your card information illegally.

For instance, it could be that an authorized user on your account is responsible for the transaction. Another possibility is not recognizing a legitimate transaction because you can’t recall doing business with the merchant. That could be a false alarm, too, since some merchants bill under a different identity than the brand name you’re familiar with.

Also note that you shouldn’t report fraud just because you don’t want to deal with a merchant. Issuers have different dispute processes for addressing situations such as:

• Not receiving goods or services you paid for
• Being billed for a recurring service that you canceled
• Not receiving a credit or refund on your card for a product or service you aren’t satisfied with
• Being charged twice for the same item
• Getting charged a higher amount than you should have been

Such incidents generally don’t qualify as fraud, and it’s usually in your best interests to sort out the issue with the merchant directly before reporting it to your issuer. Negotiating with the merchant tends to be a faster process than initiating a dispute with your card issuer in these cases.

Dispute the charge to get a refund

Once you’ve determined that you are, in fact, dealing with a fraudulent transaction, inform your card issuer immediately. Your issuer will likely lock your card and issue you a new card with a new number. Even better, all four of the major card networks offer zero-liability policies for fraudulent purchases, so you likely won’t be held liable for any legitimate fraudulent charges.

For example, Visa requires issuers to credit you for unauthorized charges within five days of you notifying them. However, this credit is provisional and could be reversed if they determine after investigating that you were guilty of “gross negligence” or fraud yourself. Credit could also be withheld, delayed or limited based on your account standing and history, delays in reporting your loss or for other findings of the investigation.

The Fair Credit Billing Act (FCBA) also offers protections for so-called billing errors, which include unauthorized charges. Under federal law, your liability for the fraudulent use of your card is capped at $50.

If you need to take advantage of the FCBA’s protections, send a dispute letter that outlines your billing problem to the issuer’s stated address for billing inquiries, making sure to reach out to your issuer within 60 days of the date when the first statement with the fraudulent charge was mailed to you. As a precaution, consider sending it by certified mail, and ask for a return receipt so that you have proof of receipt. The issuer should settle the matter within 90 days of getting your letter.

Tips to prevent card fraud

Although credit card scams are not entirely preventable, there are steps you can take to help keep your credit card information more secure.

• Don’t give out your credit card number online unless you recognize a site to be secure (for example, by viewing the padlock icon in the address bar of your browser).
• Use a virtual credit card whenever possible while shopping online, and try to use chip-based or contactless payment methods for in-person transactions.
• If you use digital wallets such as Apple Pay or Google Wallet, secure your device with strong passwords, multi-factor authentication (MFA) and biometric logins to prevent unauthorized transactions.
• Make sure you’re dealing with reputable merchants before sharing your credit card information, especially when dealing with overseas individuals or businesses. Resources such as the Better Business Bureau and online customer reviews can help you determine if they’re legitimate.
• Watch out for unsolicited emails such as those offering investment opportunities (for instance, the notorious ‘foreign prince’ scams), which are likely phishing attempts. Messages that create an artificial sense of urgency or imply that you need to make a payment right away should also be scrutinized carefully.

The bottom line

Taking action to protect your credit card details is more important than ever. But credit card fraud still happens. If you suspect you didn’t authorize a particular transaction, confirm it is indeed fraudulent and then immediately report the fraud to your card issuer. Thanks to zero-fraud-liability policies and protections through the Fair Credit Billing Act, you should be credited back some or all of your disputed amount.