How Bank Fraud Credit Cards are Handled

Bank fraud credit cards are becoming rampant, despite the banks installation and utilization of the most advanced anti-fraud system. It is basically the responsibility of banks to protect its business and its customers.

However, fraudsters and credit card thieves are also using high technology systems in obtaining information in order to commit crimes. They are able to hack most banks and credit card companies’ security system.

Major banking institutions issuing credit cards are offering security programs to protect customers like you from fraud. Some of the security services that banks offer consist of protecting customers against loss of credit card or theft, and the use of the card by any unauthorized individual. This protection is a free service by the banks and other credit card companies.

However, fraud is often discovered only when the credit card owner notifies the bank of transactions in his statement that were not made by him. Now, what happens when you report a possible fraud to your bank?

Steps Followed in Handling Bank Fraud Credit Cards

Bank fraud credit cards cases are handled by the fraud department, which performs initial investigation when a customer reports a possible fraud. Oftentimes, the staff at the fraud department blocks the cardholder’s account in order to prevent additional fraudulent activities.

The investigation will start with the gathering of evidence primarily from the merchant who provides copies of the receipts. The credit card receipts will be scrutinized for proof of fraud like mismatched signatures.


If the result of the bank fraud credit cards investigation proves that the reported transaction is not fraudulent, the bank will notify the credit cardholder to take the responsibility of paying the charges.

On the other hand, once the reported transaction is discovered as fraudulent, the credit card issuing bank will start an investigation to find out if the merchant properly authorized the reported transaction.


If proven that the reported transaction was improperly authorized by the merchant, the credit card issuing bank will request for a chargeback. A chargeback is whereby the transaction will be reversed back to the merchant. In other words, the merchant service provider will refund the issuing bank.

The issuing bank will then collect a fee from the merchant in addition to eliminating the amount of the reported transaction from the deposit account of the merchant.


After the investigation, and if it is discovered that the merchant was able to handle the reported transaction correctly, the credit card issuing bank will assume the loss.

However, most credit card issuing banks are adopting the zero-liability policy. This policy states that the credit card issuing banks are not held responsible for any fraudulent transaction charged on credit cards issued by them.

How Bank Fraud Credit Cards Perpetrators are Punished

Bank Fraud Credit Cards - Protection from Theft

Punishing bank fraud credit cards perpetrators is considered difficult because they are not easily caught. There are many possible suspects for this type of fraud. Sometimes, culprits could be relatives or friends of the victim.

Employees at the merchant service office could also be possible suspects because they access to the credit card and its details.

However, if the credit card fraud is related with an organized crime and the banks are losing significant amounts, the issuing banks will tie up with the FBI, Secret Service, and local authorities to identify the culprits and be punished.

Depending on the type of fraud and gravity of the crime, the perpetrators will be punished according to what the law states. Just the same, the usual punishment is imprisonment.