When you see a charge on your bank statement that you didn't make, the first reaction is usually panic. Whether it's a few dollars or a few hundred, unauthorized transactions trigger stress and questions. What happens next? How do banks investigate unauthorized transactions? And how long will it take before your money comes back—if it comes back at all?
Let's walk through the full process step by step so you know exactly what to expect and what your role is in resolving the issue.
Step 1: You Report the Unauthorized Transaction
The process starts with you. If you notice a suspicious charge, you need to contact your bank immediately. Most banks offer several ways to report unauthorized transactions—through their mobile app, online portal, customer service phone line, or even in-person at a branch.
The sooner you report it, the better. Under the Electronic Fund Transfer Act (EFTA), your liability depends on how quickly you act. For example, if you report a lost or stolen debit card within two business days, your maximum liability is $50. Wait longer, and you could be responsible for up to $500—or even more.
Step 2: The Bank Freezes or Flags the Transaction
Once you report it, the bank usually flags the transaction and may freeze your account or issue a new card to prevent further fraud. In some cases, they'll place a temporary credit in your account while the investigation begins. This is known as a provisional credit, and it gives you access to your funds while the bank looks into what happened.
Not all banks offer provisional credit right away, especially for credit card transactions. Debit card cases typically get faster action because of federal rules.
Step 3: Internal Investigation Begins
This is where the real work happens. The bank's fraud department starts digging into the transaction. Their investigation includes:
- Verifying transaction details: Time, location, merchant ID, and IP address.
- Checking usage patterns: Does this purchase match your usual spending behavior?
- Reviewing device data: Was the charge made from a recognized device or network?
- Looking at merchant communications: Did the merchant already ship goods or services?
If it's a credit card, the bank may also contact the merchant's acquiring bank to request evidence like signed receipts, shipping confirmation, or IP logs.
Step 4: The Bank Contacts the Merchant (If Needed)
In many cases, the bank will reach out to the merchant to gather more information. This could involve asking for:
- Proof of delivery
- Login history
- Order confirmation details
- Terms of service or refund policy
The merchant has a short window to respond—usually 10 to 15 days. If they can prove the transaction was authorized, the bank may deny your claim. If they can't, your dispute moves forward.
Step 5: Decision and Resolution
Once all the evidence is reviewed, the bank makes a decision. Under Regulation E (for debit cards), banks must complete their investigation within 10 business days. If they need more time, they can take up to 45 days, but they must provide a provisional credit after 10 days if they haven't already.
Credit card investigations fall under Regulation Z, which gives banks up to 90 days to resolve a claim. But many banks finish much sooner.
You'll get notified by mail, app, or email with the final outcome.
If your claim is approved, the temporary credit becomes permanent. If denied, the provisional credit is reversed, and you may be liable for the charge.
What You Can Do to Help
During the investigation, your input matters. Be ready to:
- Provide written confirmation of the unauthorized charge
- Share any relevant messages or screenshots
- File a police report if the bank asks for one
Being cooperative and thorough can speed up the process and increase your chances of getting your money back.
How Long Does It Really Take?
Here's a quick breakdown:
Final Thoughts
Unauthorized transactions can be frustrating, but there's a system in place to protect you. Your best move is to act fast, document everything, and stay in touch with your bank. Understanding how banks investigate unauthorized transactions helps you know what's going on behind the scenes—and gives you a better shot at a smooth resolution.
FAQ: How Do Banks Investigate Unauthorized Transactions?
What should I do if I see a charge I don't recognize?
Immediately contact your bank through the app, phone, or online portal. The sooner you report it, the better your chances of recovering the money and avoiding additional fraud.
Can banks track where a transaction came from?
Yes, banks use tools that detect IP addresses, device IDs, and merchant information to trace the source of a transaction. They often compare this data with your past behavior to flag anything unusual.
Will I get my money back after reporting fraud?
Most of the time, yes—especially if you report it quickly. Banks are required to follow regulations that protect consumers, but they also rely on evidence from both you and the merchant to decide.
How long do fraud investigations usually take?
It depends on the type of card. Debit card cases are typically resolved within 10 to 45 days. Credit card cases can take up to 90 days, though many are handled faster.
What happens if the merchant proves I authorized the charge?
If the merchant provides solid evidence that the transaction was valid, the bank may deny your claim and reverse any provisional credit. You'll still have a chance to appeal, but success depends on the details.
Stop Unauthorized Charges Before They Happen
If you're a merchant, preventing disputes and unauthorized transaction claims starts long before they reach the bank. Chargeblast gives you the tools to flag suspicious payments in real-time, respond to fraud quickly, and automate your chargeback prevention strategy without adding manual work. Because once the bank gets involved, it's already too late.
Learn how we can help you prevent disputes before they turn into chargebacks.
