Why You May Be Charged With Credit Card Fees You Didn’t Pay – And How To Avoid It

Imagine connecting a credit card to a game on your kid’s phone for convenience. A few weeks later, you find that thousands of charges have been processed on your card within days.

Your child may not be aware that they have authorized these charges while playing a game. It is also possible that the account on the game has been the target of fraud. Either way, now you are faced with a huge credit card bill.

Pay or dispute?

Believe it or not, this situation is incredibly common. In fact, a recent story in BBC News featured a family whose child spent around $ 3,700 on a game called Hidden Artifacts. Another testimony explained how a 10-year-old girl racked up $ 7,200 in Roblox charges on her phone during COVID-19 lockdowns.

In some cases, it can be difficult to know if a charge is unauthorized or “fraudulent”, or if it’s your problem to fix. Bankrate spoke to several credit experts to find out how consumers can tell the difference and how they can protect themselves.

What is unauthorized debit?

Generally speaking, an unauthorized credit card debit is a debit that you did not make and for which you have no explanation. Many times, unauthorized charges are discovered when a person goes through their credit card statements and notices charges that they did not make. For example, you might see a purchase from a store you’ve never been to, or notice repeated charges that you don’t even recognize.

“In this case, someone has your account number and used it without authorization,” says Beverly Harzog, credit card expert and consumer credit analyst for US News & World Report. That’s why Harzog and other experts agree that it’s a great idea for consumers to check their credit card statements often.

Most credit cards come with liability protection against such situations. This built-in fraud protection is one of the main advantages of using credit in the first place.

Friend, the child uses the map

That said, there is still a gray area when it comes to unauthorized use of credit cards. What if a friend borrows your credit card to make a specific purchase and then purchases other items that you never accepted?

According to Rod Griffin, senior director of consumer education at Experian, consumers who allow someone to use their credit card make a deal between themselves and that person.

If the person is using the account for purchases that you haven’t specifically approved, it’s up to you and them to pay for it, he says. “They were allowed to use the card under contract.”

In general, Griffin says, you should never let someone borrow your credit card because you risk that scenario if you do. You take responsibility for everything they buy, whether or not you like their choices.

Credit expert John Ulzheimer, formerly of Equifax and FICO, says you are ultimately responsible for the use of your card unless you contact the card issuer and the claim charges are fraudulent . Even then, he says, the card issuer may not conclude that these were fraudulent charges because you intentionally let someone else use the account.

But what if your child uses your card without your knowledge or even, as in the examples above, without their knowledge? A child who uses your card without your knowledge is not the same as lending your card to a friend or family member who is taking liberties. But according to Griffin, that still doesn’t count as an unauthorized charge. Ultimately, you have a legal responsibility to ensure that the card is not used by someone who shouldn’t have it.“You are responsible for your child, not the bank,” Griffin says. “If they have the card and use it to make purchases like it’s you… whether or not you gave them permission to do so… the charge is still valid under your contract with them.”

Even so, your lender may be willing to work with you and forgive you for the charges. “You can always ask,” Griffin says.

Dispute unauthorized charges

Suppose you add your credit information to one of your kid’s games and a hacker can access your account information from there. Once they have your card details, they quickly rack up thousands of dollars in fees.

In this case, purchases are absolutely not allowed. As a result, you can dispute the charge with your card issuer, who will initiate an investigation. While they are verifying your claim, the issuer will usually credit the charges to your account temporarily.

The process for contesting charges is relatively straightforward. You can call your card issuer using the number on the back of your card. Some card issuers also offer an online dispute process. Be prepared to share information about the amount and date of unauthorized charges, as well as any other details you have.

If the card issuer suspects that thieves have got hold of your account number, they will likely close your original card and send you a new credit card with a new account number. If the investigation shows that the charges were indeed fraudulent, you will not be responsible for the refund.

Avoid credit card fraud and unauthorized use

The more you use your credit card or account number, the more you expose yourself to the potential for credit card fraud. Fortunately, credit cards are incredibly safe to use, with the vast majority offering zero liability for fraudulent purchases. At most, your liability for unauthorized use of your credit card is $ 50 under the Fair Credit Billing Act (FCBA).

However, there are steps you can take to reduce your risk of credit card fraud. For starters, you need to keep your credit cards safe, Griffin says. This means knowing who is nearby when you use them and never exposing the account number, PIN or security code.

Also, make sure you never leave credit cards or billing statements lying around where others can see them. Griffin points out that while fraud often starts with strangers, friends or family can also steal your account information and use it without your knowledge.

Griffin also says to be careful who you decide to make an authorized user on your account, as you will be responsible for reimbursing their fees, regardless of those fees. An Authorized User Account comes into play when you actually request an Authorized User Card so that someone else can use your account.

“Think carefully before making anyone, including your children, authorized users on your accounts,” Griffin notes. Failure to approve charges made by an authorized user does not make those charges fraudulent.

The bottom line

Credit card issuers offer zero liability protection to protect your account from misuse by strangers, but that usually doesn’t extend to family and friends. Not surprisingly, the best rule of thumb to avoid incurring unpaid credit charges is to avoid letting other people borrow your credit card.

If you need to give someone permission to access your credit card, make sure it’s someone you really trust. And even then, be explicit about the purchases they are allowed to make, collect the card as soon as possible, and keep an eye on your account to review any charges.

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