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Who Pays For Unauthorised Transactions?
Smart Money

Who Pays For Unauthorised Transactions?

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One of the biggest concerns people have when giving out credit card details is the risk of unauthorised transactions. But these types of charges can happen in a wide range of circumstances, with the results and solutions varying just as much.

As the term “unauthorised transaction” suggests, it is a charge that you did not give approval for and may not even know about.

Things like credit card theft or fraud often lead to unauthorised transactions, though there could be other times when your card is used without your consent.

With so many ways to use credit cards, there are a number of people who could be responsible for unauthorised charges and, as a result, one the following three parties will end up having to pay for the problem:

  1. Your bank/credit card issuer,
  2. You; or
  3. A third party.

Most people are aware of the protection offered by banks and other credit card issuers, but there is always a concern that you may have to pay for the charges on your account.

Here we take a look at each of the parties above and when they could be held responsible for unauthorised charges.

Banks and Credit Card Issuers

Your credit card issuer protects you against most unauthorised transactions, particularly when it comes to card theft and fraud.

The MoneySmart website outlines a range of scenarios where getting your money back should be straightforward, including when a forged, expired or cancelled card is used, if a merchant incorrectly debited your account and if you have already told your bank that your card has been lost, stolen or otherwise compromised.

In addition to the bank’s policy, card processors like American Express, MasterCard and Visa also provide zero liability policies when you use your card, which means you should be able to get the money back when something does go wrong.


While the bulk of unauthorised transactions are covered by the protection policies mentioned above, there are certain conditions that you have to meet to prove that you have not authorised a transaction.

The Consumer Credit Legal Centre has advised reviewing what counts as an authorised transaction before assuming money will be easily retrieved.

Basically, if you have presented your card for payment, signed a credit card slip or given your credit card details over the telephone or online, then you could be liable for charges directly related to this activity.

The problem, however, is that there are now more ways to pay by card and more places to store your details.

If you have an iTunes, PayPal or other online account with your credit card details stored on it, then anyone who accesses your computer could also make charges with your card.

There have recently been a number of stories in the media about children racking up huge card bills via these sites. The problem is that if it is a family member, and you have given them permission to use your computer or other devices, then it is harder to prove transactions were unauthorised.

One man in the UK even reported his son for credit card fraud in the hopes of recovering  £3700 (AU$5349) that was accidentally spent on game apps.

A Third Party

In some cases, a merchant or other third party will have to foot the costs of transactions you have not signed on for.

If the merchant acknowledges a mistake on their part, for example, they could help resolve the situation by reversing the charges.

Apple, for example, helped another UK couple recover £1700 that their five-year-old son racked up on an iPad.

Similarly, making a family member repay charges they put on your credit card is an option that means they will learn a lesson and you will not be out of pocket.

MoneySmart also notes that even when you are legally liable for charges – as you may be in some of the scenarios here – “the amount you are liable for is subject to certain caps.”

Unauthorised Credit Card Transactions and the ePayments Code and

The Australian Securities and Investments Commission (ASIC) has recently updated the ePayments Code, which has some impact on unauthorised transactions.

This code, which relates to all consumer electronic payments, is designed to make things clearer for everyone involved.

“The ePayments Code provides key consumer protections in cases of fraud and unauthorised transactions and plays an important role in the regulation of electronic payment facilities in Australia,” ASIC outlined in a statement about the new release.

ASIC chairman Greg Medcraft said the updated code could be easily read by cardholders to help better understand protection and liability when it comes to electronic transactions, including unauthorised ones.

“Our new Code sets out best practice in consumer protection and is product neutral and in plain English. It will encourage consumers to have confidence in our epayment systems,” he said.

With the introduction of more electronic banking and payment options comes a range of new scenarios that could lead to unauthorised transactions. But being aware of when you may be liable and what you can do to stay protected will make sure you always know about the charges on your card.

Photo source: Shutterstock
Founder - Roland B Bleyer

Roland Bleyer

Founder of Roland has extensive knowledge about credit cards in Australia. Known as a credit card expert, he has been featured on tv and in various publications. Some popular offers on our site right now include the ANZ Low Rate. This special offer has no annual fee first year, a low purchase rate and long 0% balance transfer. Have a look also at the huge 0% for 30 months balance transfer from Citi with no balance transfer fees.

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2 comments (showing the latest 10 Q&As)

Annette Bagot

Annette Bagot

7 September 2021
I was recently scammed during which $25000 was taken off my credit card by the online scammers obviously without my consent. Can visa cover this loss.
    Roland B Bleyer - Founder


    8 September 2021
    Hi Annette, sorry to hear about your situation.This will depend on the card you have and the fraud response they have. I would suggest calling the bank directly to check on the coverage of your card. Best of luck with sorting it all out!

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