Minimising the risk of unauthorised credit card transactions

Information verified correct on September 27th, 2016

Unauthorised credit card transaction

Read this guide to find out how you can protect yourself against unauthorised credit card transactions.

Whether it’s from credit card theft, account hacking or simply a glitch in payment software, unauthorised transactions are a cause for concern. These charges indicate something has gone wrong and, in the case of fraudulent transactions, may lead to further problems.

There are also a whole range of factors and circumstances that can lead to unauthorised transactions, which means it’s difficult to know exactly how or when it could occur. But the more you understand this issue, the more you can reduce the risk of it happening to you. Here we outline the key types of unauthorised transactions, risk factors and practical steps you can take to keep your credit card safe whenever you use it.

Types of unauthorised transactions

There are two main types of unauthorised transactions that can occur on a credit card, and different ways to deal with them. These are outlined below.

  1. Processing errors. This type of unauthorised transaction usually happens when you’re making a payment, and is the result of issues with the service. For example, you could accidentally be charged twice for something because of a faulty connection, a glitch in the software or even reloading a payment page when you’re shopping online. In most cases, you should be able to reverse the charge by contacting the merchant directly and explaining what’s happened.
  2. Fraudulent transactions. This type of charge is intentional and illegal. Fraudulent transactions occur when your account has been compromised and a criminal is trying to use your credit card for their own purposes. For example, if your card is stolen and the thief uses it to make a purchase, that would be considered credit card fraud. Similarly, if your card details were obtained through online hacking, the risk of fraud would be increased. In most cases, you will be refunded the full amount of a fraudulent transaction after you have contacted your credit card company and it has completed an investigation into the incident.

Key risk factors to consider

While there are two main types of unauthorised transactions, there are many different factors that can increase the risk of these charges being made on your card. Some of the most important things to keep in mind include:

  • Online payments. While it is safe to use your credit card online, making a payment on an unsecure webpage or with an unsecured Internet connection can increase the risk of fraudulent transactions. The chance of processing errors, on the other hand, increases if you reload a payment page, press the “pay” button twice, or if you have to restart the payment process for some other reason.
  • Internet and mobile banking. Online and mobile banking networks are secure and encrypted, but there are exceptions. For instance, if you are accessing your account via a public and/or bad Internet connection, there’s an increased chance of processing errors and fraud. There’s also a chance someone could see and record the details of your account if you’re accessing your credit card account in public.
  • NFC contactless payments. NFC (Near Field Communication) uses short radio waves to allow one device to transmit information to another device. For example, credit cards with contactless payment technology such as MasterCard’s PayWave or Visa’s payPass have an NFC device embedded in them that lets you to tap your card on a reader to make a payment (instead of inserting or swiping it). While there has been some concern that other NFC devices could “hijack” the connection and obtain data from these types of credit cards, the risk is very small as all card details are encrypted and other NFC devices would have to be almost touching your card to get any information. In fact, physical theft is a bigger concern with contactless credit cards: as you can make any transactions under $100 without entering a PIN, a stolen card could be used many times for small, fraudulent charges before the account is frozen or cancelled.
  • Credit card loss or theft. There is a big risk of unauthorised transactions if you misplace your credit card or it’s stolen. As well as the potential for contactless fraudulent transactions under $100, someone could copy down your card details and then use them online at any time while your account is active. That’s why it’s important to contact your credit card company as soon as possible if you can’t find your card.
  • Skimming devices. These illegal devices are sometimes used by criminals to copy card details, and can be made to look like ATMs or other regular payment terminals. If you use your card at a terminal that has a skimming device attached to it, then there is a much greater chance of fraudulent transactions being made on your account – either straight away or in the future. Read our guide on how to protect yourself against skimming to find out more.
  • Software or processing issues. If a payment is taking longer than usual online, or if a sales person has to cancel and process a payment again, there is a chance that both the first and re-tried transactions could go through. This type of unauthorised transaction is usually made in error and can be resolved with the merchants in most cases, but it is good to be aware of the increased risk.
  • Travelling overseas. Taking a credit card with you when you travel is a convenient option, but it can increase the risk of unauthorised transactions. For example, payment systems could look different and make it easier to be fooled by a skimming device. Similarly, the way you pay may be slightly different depending on where you are, with some countries requiring you to swipe and sign for purchases, and others allowing you to insert your card and enter your PIN. Being in a new, unfamiliar place can also make you more susceptible to theft or scams.

How can I protect myself?

credit card statements

Just being aware of the factors mentioned above will help you stay protected against unauthorised transactions. But if you want to really safeguard your card, the steps below will make sure your account is as secure as possible.

  1. Review your credit card transactions. Your credit card statement includes details for every transaction made. Regularly going over this information, either on your statement or at any time through Internet banking, will help you verify charges you have made and also allow you to spot any unauthorised transactions. Then, if you do find any transactions that shouldn’t be there, you can take action immediately and reduce the risk of ongoing issues such as interest charges or fraud.
  2. Only make payments through secure services. If you’re shopping online, make sure the payment page/s are secure. They should begin with an “https:” and include a locked padlock symbol.
  3. Read privacy statements for online stores. Online retailers are required to give you access to their privacy policy. This document explains how your information is used and what details may be recorded by the store. Reading the privacy statement before you make a purchase online will help you verify that the company is legitimate, offers a secure payment method and has measures in place to reduce the risk of hacking or fraud if their website is compromised.
  4. Always use a secure Internet connection. Unsecured Internet connections, such as public or free Wi-Fi services, are more at risk of hacking than private connections. So if you plan to use your credit card or access your account, making sure you use a secured, password-protected Internet connection will reduce the risk of fraud. Don’t use free connections in cafes and airports.
  5. Use and update antivirus software. Antivirus software protects your computer and mobile devices against hackers that could try to get your credit card details when you go online. Getting this type of software for all the devices and updating it regularly will help protect you against potential fraud when you use your card or access your account on any of your devices.
  6. Report lost or stolen cards immediately. The sooner you can report a lost or stolen credit card, the less chance there is for it to be used for unauthorised transactions. Even if you think you have simply misplaced your card, it’s a good idea to call your credit card company and let them know so that they can keep a close eye on your account. You may even be able to freeze your account while you look for your card. CommBank’s NetBank service and mobile app even let you temporarily lock your card to prevent unauthorised charges while you look for it.
  7. Keep track of when a new credit card should arrive in the mail. Make sure you regularly check your letterbox if your credit card is about to expire, or you’re waiting to receive a new card you’ve applied for recently. This step reduces the risk of mail theft that could lead to unauthorised transactions – especially if the card includes contactless payment technology.
  8. Look for signs of tampered devices. This tip relates to skimming. If you’re about to use an ATM or make a payment in person, taking a moment to check the machine for any signs of tampering reduces the risk of fraud. Factors such as chipped paint, added plastic, loose fittings or even two payment machines at the register could all be signs of tampering that help you avoid becoming the victim of skimming.
  9. Contact merchants immediately if there is a processing error. If you know there has been an issue with a payment, letting the merchant know can reduce the risk of being charged twice. It also speeds up the resolution process if an unauthorised transaction is made by mistake. If you’re in-store when it happens, talk to the person serving you and/or the manager. If you’re online, contact customer service to voice your concerns so that they can look into it as quickly as possible.
  10. Contact your credit card issuer. Let your issuer know about any suspicious credit card transactions on your account as soon as you can. If it’s an unauthorised charge from a merchant you’ve done business with, they may advise you on how to resolve it directly. But if it’s not possible to reverse the transaction via a merchant, or if it’s fraud, your credit card issuer will be able to inform you and guide you through the resolution process.

Unauthorised charges are a sign that something’s gone wrong with your account. But now that you’re more aware of the different types of unauthorised transactions, risk factors and tips to reduce the risk of fraud or mistakes, you can keep your credit card account as safe as possible under any circumstances.

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