Generally, when you find an unrecognized charge on your credit card statement, there are three possibilities. An innocent mistake was made by you—in the sense that you forgot that you let your son borrow your card for a day, or the purchase is not sufficiently described on your statement so as to enable you to recognize it, or it’s a recurring charge that you authorized long enough ago so that by the time you see it on your statement, you’ve forgotten about it. Or a mistake was made—innocently or not—by either your credit card company or the merchant who charged your card; the latter being the far more likely culprit.
Or, quite possibly, you are the victim of fraud by a third-party, usually by means of identity theft.
In any of these cases, there are some simple rules to follow.
Assess the Situation
The first thing to do is to stay calm, irrespective of the size of the charge. Take a few minutes to analyze the billing and scour your memory; don’t put it off, because sometimes immediate action is absolutely required, but don’t get so upset that you act before you think.
In most cases, you will be able to eliminate a mistake made by you as a possibility relatively quickly; usually thinking about the charge for a few quiet minutes and/or talking to whoever might be authorized to use the card (remember, most any family member can use the card online with or without your permission) will settle the question.
If the mistake was yours, grin and bear it and pay the bill; if not, it is very important that you determine whether or not actual fraud was perpetrated by a third-party. There are some easy indicia of that. For example, any charge for a tiny amount such as one dollar, often tells you that someone was “testing” the efficacy of their fraud before actually spending a significant amount of your money.
Unless you can absolutely eliminate fraud by a third-party, you need to assume that it was just that, report it immediately to your credit card company and take whatever other steps are necessary to protect yourself. This of course would include examination of every one of your credit card and bank accounts. Best to take no chances; when in doubt, cancel them out!
Dealing with Errors and Disputes
If and when you have eliminated third-party fraud as a reason for the erroneous charge, then you need to follow the steps provided to you on your credit card billing statement. While it may be convenient to pick up the phone and call your issuer, to protect your rights under the Fair Credit Billing Act you should put your dispute in writing, following the instructions on your statement. You have 60 days from the date the statement on which the charge appears to file a dispute. Sometimes it’s difficult, like if you actually made a purchase but were charged the wrong amount. Sometimes it’s even more difficult, particularly in the case of a subscription that just won’t stop no matter how many times you cancel it.
Unfortunately, whatever procedures you need to follow must be followed doggedly until the problem is absolutely resolved. In the case of a non-revolving charge card, such as American Express, knowing that the problem was solved is easy; it disappears from your bill and never reappears. However, in the case of a revolving charge, the erroneous amount may just keep being added to your monthly statement, often making it difficult to know exactly what resolution has or has not occurred. Once you’ve disputed it, the issuer must resolve it within two billing cycles.
If you have a genuine dispute with the merchant, the FCBA requires the credit card issuer to assist you. You can dispute a purchase if the item was not delivered as agreed, for example glassware that arrived broken, or a set of golf clubs missing the 6-iron.
We have found that when the credit card issuer is the cause of that error, resolution of the problem is usually quick and easy, although a conversation after a long period of elevator music on hold may be necessary. Remember that if the card companies want to steal from you, they can do it much more easily by interest rates and fine print rather than by actually padding your bill with fake or overstated charges for purchases.
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This article was updated December 5, 2011.