Credit Card Unauthorized Charges: You Could Be Responsible For $50

We love credit cards here are creditcardGenius (they’re in our name, after all), but one thing to be careful of are the fees.

There are lots of little fees to be aware of, for things like cash advances, balance transfers, foreign exchange, and overlimit fees, to name a few.

And now, there’s a new one that’s starting to creep into the Canadian landscape – and it has to do with unauthorized credit card charges, also known as zero liability insurance.

Unauthorized credit card charges

We have to give a hat tip to Reddit user HowIsYourHoneypot on this one with this thread he started.

There’s an obscure section in the Bank Act that essentially allows credit card companies to charge cardholders a portion of any unauthorized transaction. You can read it for yourself here.

The banks have the ability to make you pay $50 for any unauthorized purchases, while the bank covers the rest.

It’s a fee the banks haven’t charged much, but they’re starting to update their agreements.

One such example is with CIBC. They’re updating their cardholder agreement effective June 19, 2022 to include this $50 charge. You can view the upcoming agreement change here.

I’ve checked the banks I have credit cards with and found no mention of me being responsible for paying the first $50 of any unauthorized transactions. I have credit cards with American Express and Scotiabank, and in the “loss, theft or unauthorized use” sections, they mention that I am not liable for any unauthorized transactions.

It’s best to check your agreements with your bank online and see what they say.

We’ve checked the major banks in Canada and found these issuers are also charging this fee or are planning to charge it soon:

• BMO
• Rogers

This is obviously something that can change over time, so be aware of any future cardholder changes from your bank.

What you can do about unauthorized credit card fees

It’s very easy to lay the blame at the bank’s feet for charging you for unauthorized transactions. But for the ones actually implementing it, they’re simply following the law in what they’re allowed to do.

If you want to avoid this potential fee, the easiest thing to do is switch to a bank that doesn’t charge it.

The other thing to do, as noted in HowIsYourHoneypot’s thread, is to contact your Member Of Parliament. They are the ones with the power to put forward bills and get this changed.

If you wish to do so, this site will help you find your local MP.

What will you do about unauthorized credit card fees

It’s obviously not great to find out you could be partially responsible for paying unauthorized transactions.

Hopefully, it’s a law that can get changed so this doesn’t continue to happen.

What are your thoughts? Plan on contacting your MP?

Let us know in the comments below.