How To Fight Fraudulent Bank Account Charges

It can be frightening to look at your bank statement and notice transactions that you know you didn’t make.

If you suspect that your bank account has fraudulent charges on it, the longer you wait to act, the less you can do about it.

What To Do When You Discover Fraudulent Charges on Your Bank Account

In this article, I’m going to tell you what you need to do if you find fraudulent charges on your bank account statement and how to prevent them.

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Money expert Clark Howard's Consumer Action Center has been getting a lot of calls about fraudulent charges of late.

If you find out that it has happened to you, first off, don’t panic. A calm head can help you handle this situation in the best way.

The good news is that if you report the fraudulent charges within 60 days after you get your statement, your liability is capped at $500.

How To Report Bank Account Fraud

Here are some things you need to do to protect yourself in the event you discover fraudulent activity on your account.

Dispute the Charges Right Away

Being timely about reaching out to your financial institution and disputing the charges is crucial, Clark says. Don’t wait around!

“Contact your bank immediately and tell them there are fraudulent charges on your account. A normal thing that people do every day is report these fraudulent transactions,” Clark says on his podcast.

Follow Up in Writing

To document that you've reported the fraudulent activity on your account in a timely manner, the Federal Trade Commission (FTC) says you should write a follow-up letter or email to the bank explaining the issue.

Send the letter via certified mail with a return receipt requested, the FTC says, so you can be sure that the bank received your correspondence.

How To Protect Your Bank Account Against Fraud

This is one of those cases where an ounce of prevention … well, you know the rest.

Here’s what you should do.

Use Strong Passwords

If you bank online, remember to use strong and unique credentials so that crooks won’t be able to guess your password.

Never use the same login information for other accounts, and don’t write down your passwords in places that are easily accessible to others.

Monitor Your Account

While it’s a good idea to review your bank statement as soon as it’s available each month, get in the habit of reviewing your account even more regularly. This won’t actually prevent fraud but will help you find out about it more quickly.

“People who don’t look closely at their bills could go months with fraudulent charges on their account,” Clark says. “You only have 60 days from when the fraudulent charges appear to dispute those and have those funds credited back to you.”

Clark is right. According to the Electronic Fund Transfer Act, which protects consumers who conduct electronic transactions, if you don't dispute unauthorized charges or bank errors within 60 days, you could face "unlimited liability."

If you’ve notified the bank within that time frame, federal law limits your responsibility for unauthorized charges to $50 at the most.

  • Print out your bank statements: If you receive e-statements delivered to your inbox from your financial institution, print them out. With a paper copy of your bank statement in hand, go line by line looking for bank errors and any other discrepancies.
  • Set up bank balance alerts: Some online-only financial institutions, including Chime Bank and Ally Bank, automatically send text messages or push notifications to your phone when there's a transfer or other transaction to your account. Check your financial institution's website or app to find out how to set up alerts that come to your phone.

Use High-Tech Identity Authentication Methods

Some financial institutions like Bank of America allow you to use biometrics to access your online accounts. You enter your fingertip print in the app or scan your face to access your account via facial recognition.

If you have a Chase account, you can take advantage of Voice ID, which can be set up to recognize your voice commands.

Contact your bank and ask about any high-tech methods it uses to authenticate its users.

Avoid Public Wi-Fi

Public Wi-Fi can be a major security risk.

“Like so many people today, I have unlimited data on my cell phone. I’m also privileged that my cell phone comes with unlimited hotspot,” Clark says. “Unless I’m at home or work, where I think I can trust the Wi-Fi, I operate off my own hotspot so that I’m not putting myself in the position where I might be exposed and vulnerable.”

Final Thoughts

When it comes to disputing and removing fraudulent charges on your financial accounts, the key is to contact your card issuer as soon as you notice an issue.

When it comes to credit cards and debit cards, Clark is adamant that you should never use the latter for purchases. Here's why.

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