An “unauthorised transaction” is a charge that you didn’t give approval for, and may not even know about.

If your credit card has been stolen or your details nabbed online, it more often than not leads to unauthorised transactions. It’s worth noting there could be other times when your card is used without your consent (as anyone who’s left a toddler with an iPad finds out the hard way).

There’s basically three parties who could be left holding the bill when someone uses your card without your permission:

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

Let’s take a look at when each of these 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. That includes 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.

You

While the bulk of unauthorised transactions are covered by the protection policies mentioned above, there are certain conditions you have to meet to prove that you didn’t authorise 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’s been a number of stories in the media about children racking up huge card bills via these sites. If it’s a family member, and you’ve given them permission to use your computer or other devices, then it’s 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.

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) updated the ePayments Code on the 2nd June, 2022 which has some impact on unauthorised transactions. This brought it up to date to handle payments made on the New Payments Platform.

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.

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