Who Is Responsible for Unauthorized Credit Card Charges By a Family Member
You can report unauthorized charges on your credit card statement as fraud, even if the purchase was made by a family member. But maybe pressing charges and pursuing legal action against this person isn’t the route you want to take. What can you do? Who is responsible for paying the charge?
Frankly, if you are an account holder, you are responsible for your credit card and the charges made with it. Unless you choose to claim the charge is fraudulent and dispute the credit card charge, you ultimately are expected to pay for them. However, if the person was an authorized user on your account, you will not have the option to dispute the charge, and must pay regardless.
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Generally, you will have the option to add authorized users to any credit card or account you own. But once you add someone as an authorized user to your credit card, such as a spouse, child, or parent, you give that person full permission to use the card as they wish. Even if you both have agreed to only use the card for purchases you discussed and approved, this promise will not hold up in a court, and you will be responsible for the credit card charge.
Understand that an authorized user is not the same as an account holder; the account holder (or holders) ultimately bear responsibility for paying off credit card debt. So even if you didn’t “approve” of the charges, by making someone an authorized user, you are giving them permission to charge transactions to your account, with the understanding that you will end up paying them off.
If you notice unauthorized charges on your bank statement, you should call your bank or card issuer immediately. They will put a block on your card, and send out a new card that you will receive within a few business days. Your new card will have new account information in case your account number was stolen.
If you don’t want to pay the charge, you will be instructed to file a dispute. They will likely also instruct you to contact the police and file a police report. This supports your dispute case, but can also protect you in case your identity is stolen.
Dispute a Charge
If you wish to dispute the charge, here are your next steps:
- Contact your bank or card issuer immediately to cancel the card and initiate the investigation.
- Contact your local police department to file a report. Most financial institutions will require this in order to dispute the charge.
- Write a letter to your card issuer detailing the dispute and everything you have done so far, i.e. contacting your bank and the police.
- Wait for your card issuer to decide whether the dispute is approved or not. If approved, they will refund the charge. If denied, you will receive an explanation letter.
If you found out the unauthorized purchase was made by a family member, then you will want to call your bank and the police department to cancel the dispute. However, this means you are stuck with the charge and someone will need to pay it. If you do not wish to pay the charges, you can pursue the dispute, but the charge will be considered fraudulent and the person who made the purchase would be held liable.
Dealing with unauthorized or fraudulent credit card charges can be stressful, but things get even trickier when family is involved. Maybe your teenager took your card for a shopping spree. You don’t want to pursue legal action, but now you’ve got a bill to pay and some discipline to impose. Here are a few ideas for how to resolve the issue:
- Ask the family member to pay for their purchases.
- Work out a payment plan.
- If it was your child, you could request that they take after-school jobs to pay you back for the bill.
- If all else fails, you can file a police report and dispute the charge with your card issuer.
- If the family member was an authorized user on your credit card, remove them from the card or put a spending limit on their purchases.
It’s always a good idea to keep a close eye on your bank statements and watch for unauthorized charges. When you do spot one, act fast to contact your card issuer and the local police. But if you find out the purchase was made by an unauthorized family member, you may want to resolve the matter by asking for repayment or with a payment plan that works for both of you.
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Tylene is a freelancer in Boise, Idaho. She's a self-taught personal finance hacker with zero debt. She eats avocado toast for breakfast.
This post was updated November 13, 2018. It was originally published October 13, 2018.