When an unauthorized transaction is reported, a bank typically gathers information, analyzes the incident, and makes a determination about what happened and what the next steps will be.
In today’s era of digital commerce and banking, there are a number of options that can make it easier to pay for goods and services, such as online bill pay, debit cards, and mobile wallets.
Sometimes, however, despite your best efforts to keep your private information secure, you may discover an unauthorized transaction. If this happens, know that banks work hard to investigate and resolve this kind of issue in several ways. Learn more here.
What Are Unauthorized Transactions?
Unauthorized transactions are any bank account transactions that the account holder did not approve of. It could be a payment that was mistakenly charged to your account, but it could also indicate fraudulent activity. For instance, a criminal might write a fraudulent check from your checking account or use your debit card to make an unauthorized withdrawal from your bank account without your knowing it.
There are a number of different methods fraudsters may use to try to get access to your checking account, including:
• Stealing and “washing” a check (meaning erasing the original information and adding fraudulent details)
• Stealing your debit card (or finding a lost debit card)
• Stealing your information with card skimmers and hidden cameras
• Conducting a scam in which they try to convince you to share your confidential account info
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Initial Detection of Unauthorized Transactions
There are two main ways to detect unauthorized transactions:
1. You as the account holder may notice a transaction in your checking account that you did not authorize. If you have bank alerts set up for your account, you may also get a push notification about a transaction you did not make.
2. The bank itself may detect the unauthorized transaction. Banks have advanced fraud detection methods, including pattern recognition, machine learning, artificial intelligence, behavioral analysis, geolocation data, and more that can tip them off when a transaction appears to be fraudulent.
If you as the customer notice the bank account fraud, it’s crucial that you contact your bank’s fraud department immediately (the number is typically on the back of your debit card). A representative can walk you through next steps, such as:
• Canceling or freezing your debit card
• Ordering a new card
• Updating your bank account password (and ideally your email password as well)
• Starting a formal fraud investigation with the bank
If the bank’s fraud detection software notices a suspicious transaction, the bank will generally contact you via text, email, or phone call to verify the transaction. If you don’t recognize the transaction, the bank will begin its fraud investigation.
Recommended: How to Report Identity Theft
Bank Investigation Process
When consumers report potential fraud, banks generally have 10 business days to investigate the transaction (20 business days if the account was opened in the last 30 days). Once the bank has determined there was an error, it has only a single day afterward in which to correct it.
If the bank can’t complete its investigation within 10 or 20 business days, it must issue the consumer a credit to the account for the disputed amount, minus $50, while the investigation continues. Usually, the bank or credit union has up to 45 days to finish their investigation and share their findings. In some cases (such as if the incident occurred in a foreign country), it may take up to 90 days to achieve a final resolution.
Whether you as the consumer bring the unauthorized transaction to the bank’s attention or the bank’s fraud detection system finds the issue, the bank or credit union will typically investigate as follows:
1. Gather transaction details. The bank’s fraud team will collect as much information about the transaction as it can, including the time and date, the merchant, and the amount. They’ll also analyze other transaction patterns and consumer behavior.
2. Make a determination. Based on these details, the bank should be able to determine if the transaction was unauthorized or if there are fraudulent charges — and if the merchant has any blame in the scenario.
3. Take action. The bank may or may not reimburse the customer, depending on their findings. Further, the bank may pursue charges against the criminal, if applicable and possible. The bank will also file a suspicious activity report (SAR) if that is deemed appropriate and hand the case over to the authorities.
Recommended: What Can Someone Do With Your Bank Account and Routing Number?
Fraud Prevention Measures
Even consumers who take the strictest safety measures can be victims of bank fraud. Nevertheless, it’s worth doing everything in your power to avoid unauthorized transactions, including:
• Using unique, complex passwords. Your email, financial accounts, and any other online accounts should have unique and complex passwords. These should be updated often and never reused or shared. You might want to consider using a password manager service to assist with this.
• Turning on alerts. Bank alerts can be helpful in spotting fraud in real time. Turn on all relevant alerts available in your bank’s mobile app or on its website. You can also monitor your transactions in app or on the site and balance your checking account regularly to help you identify unauthorized charges.
• Using all the security measures available to you. Multifactor authentication (MFA) and biometric screening (such as facial recognition) add extra layers of protection on top of passwords.
• Not sharing your PIN. Think of a unique PIN for your debit card, and don’t share it with anyone.
• Protecting your wallet. Always be smart about where you stash your wallet. Also consider using an RFID wallet. This can block contactless scanning of your cards’ chips, which hold your confidential banking details. Only carry the cards you need; keep the rest at home in a safe.
• Being careful at ATMs and points of sale. Make sure no one is watching you punch in your PIN when making a transaction (they could steal your card and then use it). Always check ATMs and gas pumps for signs of card skimmers, or devices that fit over the slot where you dip your card and steal your credentials.
• Recognizing phishing scams. Fraudsters are always finding new ways to get account information. Educate yourself about the latest phishing and bank scams, and always be wary when someone asks for your account information. Just because someone calls or texts saying they are “from your bank” doesn’t make it true.
The Takeaway
Just as it’s important to take basic security measures to prevent your financial information from getting into the wrong hands, it’s also crucial to act quickly if you detect an unauthorized charge on your debit card or a fraudulent transaction in your account. Banks must take reasonable steps to investigate unauthorized transactions and notify you of the results in a timely manner.
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FAQ
What triggers a bank investigation of unauthorized transactions?
If you don’t recognize a charge in your checking account, you should report the unauthorized transaction to your bank right away to trigger an investigation. To do so, contact your bank’s fraud department. Banks also monitor your account for fraudulent charges and may contact you if their security measures detect an unauthorized transaction.
How long does a bank investigation typically take?
In most scenarios, banks have 10 business days to investigate a fraudulent transaction after you report it. If they can’t finish it in that time, they may have to credit your account while they continue the investigation. In total, banks and credit unions have 45 business days to resolve an issue, except for some specific exceptions (like if the fraud occurred in another country).
What actions can customers take to help prevent unauthorized transactions?
To help prevent unauthorized transactions from hitting your checking account, you can use a strong password and opt in to multifactor authentication or biometric screening; turn on fraud alerts; be cautious when using your debit card in public; and freeze or cancel your card if you lose it, among other habits.
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SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
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