Finding a charge on your credit card that you don’t recognize can be troublesome. While in some cases, seeing a transaction on your credit card that you don’t remember might not be a big deal, it can also be a red flag that warns of a significant problem.
Below you will find tips on how to tell the difference between a legitimate credit card charge you don’t recognize and a fraudulent transaction. Knowing how to take action to resolve unauthorized charges when (and if) they happen to you is an important part of being a responsible credit card user.
Aren’t sure how to spot fraudulent charges? Here’s how to read your credit card statement.
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What to do if you don’t recognize a charge on your credit card
“When you see a charge you don’t recognize on your credit card, it’s important to take action right away. Start by reviewing your recent transactions and reaching out to the merchant to clarify what the charge is for”, says Lisa Plaggemier, executive director at the National Cybersecurity Alliance.
As a credit card holder, it’s important to make a habit of reviewing the charges on your account on a regular basis. At the least, you should review your entire credit card statement once a month. You may also want to look through the transactions that post to your account throughout the month via your online account or mobile app.
If you discover a charge on your account that’s unfamiliar, there are a few steps you can take.
- Ask family members and friends: Talk to family members and friends to see if they recognize the charge, especially authorized users or anyone who might have access to the account.
- Retrace your steps: Review other transactions that occurred around that date and time and check your calendar. You might be able to recall a forgotten transaction by looking up other charges and activities that took place on the same day.
- Research online: Look up the name of the merchant online as it appears on your statement. Your credit card company may provide additional merchant details you can use in your search, such as the merchant’s phone number or website. You might not recognize a $1.50 charge for “USA Technologies”. But when you see a note on your statement that the charge is for “vending”, it might help you remember you used your card to pay for a drink from a vending machine.
- Call the merchant: If all else fails, check your statement or reach out to your credit card company for the phone number of the merchant. From there, you can contact the merchant and mention there’s a charge on your credit card you don’t recognize. Ask for details about the goods or services the company sells to see if it jogs your memory. If it doesn’t, you can request a refund.
What to do if you didn’t authorize the charge
If you didn’t authorize a charge on your credit card, federal law offers you certain rights to protect you. According to the Fair Credit Billing Act (FCBA), you can dispute billing errors that appear on your credit card statement, including unauthorized and fraudulent transactions.
It’s important to report unauthorized charges to your credit card issuer right away. Per the FCBA, if you report fraudulent transactions on your credit card due to theft of your credit card number or loss of your card, the card issuer may only hold you liable for up to $50 of the transaction. The catch is that the credit issuer must receive your claim within 60 days after you first get your bill.
At present, the major credit card networks (VISA, Mastercard, American Express, and Discover) all have zero liability policies. This means that if you report unauthorized transactions promptly, you won’t have to pay even one dollar of the fraudulent charges. (Note: The fraud protections available to you when you use a debit card aren’t as robust as those you enjoy with credit cards).
“If fraudulent charges keep popping up, notify your card company immediately and consider ordering a new card just to be safe. In general, keeping your card locked unless you are actively using it is a great way to safeguard your account”, says Plaggemier.
Disputing the transaction
The Federal Trade Commission (FTC) recommends writing to your credit card issuer if you need to dispute an unauthorized charge on your credit card statement. You can use this sample letter to do so. However, it’s important to mail your dispute to the billing inquiry address, not the address you use for payments.
Again, you want to make sure the letter reaches your credit card company within 60 days after the card issuer sent you the first statement with a billing error. It’s also wise to send your dispute letter via certified mail so you’ll have a way to prove that the card issuer received it.
How to read charges on your credit card statement
It’s important to review your credit card statement in full each month. However, it’s not always easy to understand the charges that appear there.
Most credit card companies will list the transactions on your statement in the order that they occurred. Some card issuers may also group transactions by user (if you have multiple authorized users on a single account) or by transaction type.
Again, it’s important to go through each charge, line by line, and make sure you recognize the merchant and dollar amount. If you have questions about a charge, you can use the steps above to try to identify it or dispute it if you believe it’s invalid.
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Where small charges come from and when you should worry
Small charges on credit cards, perhaps for $1-$5, may be a sign of a pre-authorization for certain types of transactions. Merchants like gas stations, hotels, rideshare platforms and rental car companies are known for charging small amounts on credit cards to pre-authorize the account. Later when your actual transaction posts, the pre-authorization should go away.
However, sometimes a small charge on your credit card could be a sign of a more sinister problem. A scammer may attempt to charge small amounts to see if your account is active, and to see if anyone will notice the unauthorized transaction. If the small, fraudulent activity goes unnoticed, the criminal may attempt to use your account for larger purchases.
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Frequently asked questions (FAQs)
In general, the best way to cancel a credit card transaction is to contact the merchant. If you ordered goods or services, you may be able to cancel the transaction depending on the merchant’s terms and conditions. It can also be helpful to contact the merchant for a refund in scenarios where you were charged multiple times, charged too much or if you returned an order and are waiting on a refund.
Of course, you may need to reach out to your credit card company to initiate a dispute if there’s a transaction on your account you don’t recognize. Other scenarios where you might need to get your credit card issuer involved include recurring memberships you’ve been unsuccessful in canceling or incorrect billing amounts that a merchant is unwilling to resolve.
If you want to dispute a credit card charge, you should notify your credit card issuer in writing within 60 days of receiving your statement with the billing error. It’s important to send your dispute in writing even if you’re trying to resolve the issue with the merchant because the 60-day clock doesn’t pause for those negotiations.
There are several good habits you can develop to try to keep your credit card information safe. The best practices to follow include not letting others use your credit card and never sharing your credit card information over email, text or social media.
It’s also wise to shred documents that contain your credit card information. You should also never leave your credit cards in a vehicle — locked or unlocked — where a thief might have access to them. If you ever lose your credit cards or someone steals them, be sure to report the incident to your credit card issuer right away.
Some merchants may use a different name on credit card statements that you don’t recognize, such as a DBA (doing business as) or a parent company name. These name differences could lead to confusion and cause cardholders not to recognize a charge.
However, before you dispute a charge, it’s a good idea to call the merchant and get some information about the transaction to see if you recognize the store and the goods or services it sells. A call to the merchant along with a little online research may be enough to help you identify a charge even if the merchant name isn’t one that’s familiar to you.
