Banks refuse to refund fraudulent claims

This page was originally published in early 2022, and during that time features stories from Bankrate readers. The rest of the article has since been updated.

There are many forms of identity theft, but the most common type is credit card theft. According to the latest data from the FTC Consumer Sentinel Network Report, in the first quarter of 2024 there were 101,461 reports of credit card-related identity theft. Credit card holders should clearly be careful when avoiding credit card fraud.

Therefore, having your bank refuse to entertain a fraudulent claim if you are affected by credit card fraud and report the issue to the card issuer is shaming your injury.

Reader Sarah writes that this is exactly what happened to her:

“My mother was undergoing rehabilitation in August 2021. Someone apparently stole, steal, or cloned her card and bought it for about $500,” wrote Sarah. She explains that her mother was bedridden at the time of the charges and was unable to spend $500 on her regional bank visa credit card in three days at Walmart, Shell and CVS.

“They don’t even provide copies of receipts. My mother never left rehab at any time. She didn’t drive. She had her belongings when she checked her out of rehab. What’s my reliance on? My mother is on a limited income.

Sarah, Bankrate Leader

How do banks investigate fraud?

If you suspect you are a victim of credit card fraud, you are protected under the Fair Credit Claims Act. To access these protections, you must immediately contact your credit card issuer and challenge the transaction within 60 days of the invoice date. Opposing a transaction leads to investigations. The same should be done with debit card fraud, especially since debit cards do not have the same level of protection as credit cards.

Rational Dispute Investigation

The law places certain liability on lenders when investigating allegations of fraudulent transactions and cannot escape with a rough review. Instead, a reasonable dispute investigation should be carried out. For example, a reasonable investigation of this type of conflict could include:

• Compare billing patterns for billing, such as the type and amount of purchases for consumers prior purchases and their previous purchases.
• Check delivery locations for consumer homes and business addresses
• Consider where the purchase was made in relation to a consumer’s address and typical shopping venue.
• Compare purchase receipt signatures with consumer signatures
• Seek documents that will help you verify your claim
• Seeking a signed statement about fraudulent transactions
• Request a copy of a police report regarding unauthorized transactions you may have submitted
• Request input from someone allegedly committed fraud or authority to use your card

The publisher has a reasonable right to expect your cooperation in collecting this type of input. However, you cannot automatically deny your claim because you did not provide specific information.

However, if the issuer does not have enough information to confirm fraudulent transactions and does not provide relevant information to help build the case, the issuer may close the case due to lack of information.

In response to a comment question about Sarah’s mother’s case, a spokesman for the Regional Bank said: “Local banks are committed to helping to protect their customers from fraud attempts.

What if the bank refuses to issue a refund?

If a fraudulent transaction claim is rejected by a bank, you should first look into why the claim was rejected. For example, a bank may claim that you do not reasonably protect your identity or account. Or you may conclude that you are making a purchase and trying to get out of their payments.

The silver lining means you don’t have to prove your innocence. And you are responsible for the issuer to prove the case, so that you are liable for fraudulent claims.

While collecting information about the case from your bank, you must:

• Start the appeal process. Typically, the issuer can appeal a decision within a certain period of time. According to the FTC, it is guaranteed at least 10 days after receiving the explanation. Sue your bank’s decision and send a letter stating that you are following other instructions that the bank provides regarding the appeal.
• Submit a police report regarding fraudulent transactions. You can also file a lawsuit with the Federal Bureau of Investigation if the amount is large enough.
• Please file a complaint with the bank. A good way to get the attention of a bank is to file a complaint with the regulator.
• File a complaint with the government agency. File a complaint with the Federal Trade Commission or the Consumer Financial Protection Bureau (CFPB) can also drive your case.

If you feel like you need more advice or want to understand your legal rights better, you can even talk to an attorney and get specific information about your case.

Conclusion

To ensure a reasonable investigation, there are certain rules that banks must follow when considering credit card fraud claims. Sarah, in your situation you should follow up on the local bank dispute process and ask why your mother’s claim was rejected.

If you are not satisfied with the bank’s response, you can file a complaint with the CFPB or the Federal Reserve Committee, which regulates regional banks. Another ask is to file a complaint and go to the Alabama banking department, as the bank is based in that state. You can also submit a police report on your case, or hire an attorney to give you specific advice.

If you believe your mother’s card has been infringed, you must ask the bank to cancel and issue a replacement card. If you are no longer using that bank, you can see if your mother prefers to sign up for a new credit card from another issuer. We hope that mom’s fraud investigation will settle you in your satisfaction.