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How to reverse unauthorised transactions
If you find a suspicious transaction (or one that you don’t remember) when checking your credit card statement, then it could very well be unauthorised or fraudulent. Here are steps you can take to have the transaction reversed:
1. Double-check the transaction
An unauthorised transaction can be a payment to a person or company you aren’t familiar with, a cash withdrawal from a place you’ve never visited, a transaction on a date you didn’t use your card and/or a payment made twice.
It’s important to note that sometimes businesses will use a registered name that is different from their trading name or have their payment device registered under a different name. Before reporting a transaction as unauthorised, think about what purchases you’ve made recently and if any of them were the same value as the suspicious transaction. It may just be the case that a lender or merchant you purchased from has a different registered name than the one you associate them with.
If you don’t recognise the name on the transaction you can try searching the name online. But if nothing familiar comes up, you can also call the business you suspect the transaction to be from to confirm.
2. Lock your credit card
If a fraudster has gotten a hold of your details and made an unauthorised transaction on your credit card, there’s a chance they could keep on spending, unless you take swift action.
After discovering a transaction that you suspect to be fraudulent, you can usually temporarily lock the credit card in question. This can be done either through your bank or financial institution’s website or mobile app. Locking your card as a temporary measure can provide peace of mind while you investigate the transaction.
It’s also worth keeping in mind that if the card has been compromised by fraudulent activity, your financial institution is likely to automatically cancel and replace your card. Otherwise, you’re likely to be vulnerable for further unauthorised transactions.
3. Alert your bank or financial institution
Once you’ve locked your credit card to prevent any further fraudulent activity, you should contact your bank or financial institution as soon as possible to report the unauthorised transaction. There are several ways you can do this, including via phone, mobile app, email or in person at a branch.
It’s worthwhile to put your case in as soon as possible, ideally within 10 business days. According to the Federal Government’s MoneySmart website, the sooner you notify your financial institution, the more likely your case will be resolved. Your case may take longer to resolve if you report the fraudulent activity 10 business days after the transaction date.
Your bank will typically investigate the transaction, and if it’s satisfied that it’s genuinely fraudulent, it’ll reverse the transaction and refund your account where possible. Note that some transactions may take longer than others for your bank to assess. For example, it may take up to 45 days for a card dispute to be approved or denied according to CommBank. Once your bank has determined the outcome of their investigation, they will usually notify you by letter or email.
It’s important to note that according to MoneySmart, you’re unlikely to get your money back from an unauthorised transaction if you:
- acted fraudulently yourself,
- didn’t keep your PIN or password secret,
- didn’t inform your financial institution that your card was lost or stolen or that someone else potentially knew your PIN or password in a timely manner,
- accidentally left your card in an ATM.
As well as the option of contacting your bank, Visa and Mastercard also both have their own facilities for reporting fraudulent transactions, and they can lock or cancel your card for you, as well as notify your bank or financial institution of the fraudulent activity on your behalf.
4. Check and change your online banking login details
While a criminal wouldn’t necessarily have needed to access your online or mobile banking to make fraudulent transactions on your credit card, it’s important to change your passwords and PIN just in case.
Will my bank refund an unauthorised transaction?
Generally yes, if the bank or financial institution’s investigations reveal it to be a genuine unauthorised transaction. You’re also more likely to have an unauthorised transaction resolved when you report the fraudulent activity within 10 business days of the transaction date.
If you report the transaction beyond seven months after the date, however, the Australia Financial Complaints Authority (AFCA) warns that your financial institution will have to obtain consent from the recipient to process the refund.
On top of the fraud protection that normally comes with Visa and Mastercard cards, your financial institution may also provide a security guarantee on your account. As long as you follow their terms and conditions—maintaining a good level of security of your banking details and reporting an incident as soon as possible—you will get a refund if the transaction is deemed to be unauthorised.
What if the transaction was a mistake, but not unauthorised?
There are some situations in which you may be able to get your money back even if you made or authorised the transaction. For example, if you incorrectly entered a BSB or account number when making a payment, you’ll generally be able to obtain a refund if you contact your financial institution within 10 business days and the transferred funds are still in the recipient’s account.
Generally, your financial institution can request a refund from the recipient on your behalf. But again, only if it has been seven months or more, and the recipient consents to the return of the funds.
How to dispute a transaction?
If you’ve gone through the process of requesting an unauthorised transaction be reversed and you’re unhappy with your bank or financial institution’s decision, it’s recommended that you complain directly to your financial institution. This can usually be done over the phone, via email or at a branch.
The Financial Rights Legal Centre recommends that you explain why you’re not liable for the transaction, or why it was a mistaken payment, or why it should have been a chargeback and keep a physical trail of your communications (e.g. an email chain or a hard copy of a letter). Your financial institution should respond within 30 days.
If you’re still unhappy with your financial institution’s response, you can make a complaint to the Australian Financial Complaints Authority (AFCA). Time limits may apply when complaining to AFCA, so it’s suggested to make a complaint sooner rather than later. AFCA will consider the reasons you provided for requesting the refund, whether your complaint was made within the required time limits and whether your financial institution acted reasonably.
If your complaint is in regards to a mistaken payment, your AFCA complaint is to be lodged against your own financial institution, regardless of which financial institution caused the issue. Both financial institutions involved must cooperate with the process and are bound by AFCA’s decision.
If a chargeback is rejected by a merchant’s financial institution, however, the payment network (e.g. Visa, Mastercard, Amex etc.) makes the final decision. AFCA cannot review payment network decisions, only the actions of financial institutions.
What is fraud protection and which credit cards offer it?
Fraud protection is a feature that generally comes with all Visa and Mastercard, including low-rate and low-fee cards, as well as premium and rewards cards. It may also be available for some cards from other payment networks (i.e. American Express).
Both Visa and Mastercard have Zero Liability policies in place which protect credit card customers against unauthorised transactions and fraudulent activity. These policies generally mean customers aren’t held responsible for unauthorised transactions made using their credit card/s.
Some banks may have separate fraud prevention measures in place, such as 24/7 monitoring to help detect suspicious transactions. Consider checking what additional security is on offer from credit card providers if you’re comparing credit cards. Bear in mind that some security features may only be available on certain cards and for certain types of use.
You can compare credit cards with Canstar. It’s important to read any relevant documentation, such as the Product Disclosure Statement (PDS), Target Market Determination (TMD) and Key Facts Sheet, for any credit card product you’re considering.
