Unauthorized Transaction

In simple terms, an unauthorized transaction is a card payment without the consent or approval of the cardholder. Transactions are only considered unauthorized if the user has no real or implied authority, and the actual cardholder does not benefit from the transaction.

Those caveats are put in place to prevent frivolous claims. For example, if one holder of a joint account makes a legitimate transaction, the co-cardholder can’t argue that the purchase was unauthorized, even if the buyer did not have express permission.

Many unauthorized transactions, however, are the result of fraud. This can occur in a variety of situations, including stolen payment credentials, identity theft, or account hacking. Financial institutions and payment processors use sophisticated security measures to identify and prevent unauthorized transactions before they actually happen.

For their part, consumers are also encouraged to take proactive steps to safeguard their payment information, monitoring their accounts regularly, and reporting any suspicious activity immediately.