Unauthorized Transaction

An unauthorized transaction occurs when a payment is made using a person's credit or debit card or another payment method without their permission. This is often the result of fraudulent activities or cybercrime, where an individual's payment details are stolen and used illicitly to purchase goods or services.

Unlike declined transactions, where an issuer refuses to authorize a payment due to insufficient funds, suspected fraud, or other reasons, unauthorized transactions are successfully processed without the knowledge or consent of the cardholder. This can lead to financial losses for the victim and a complex resolution process involving disputing the charges with the card issuer to obtain a refund.

Detecting and preventing unauthorized transactions is crucial for protecting consumers. Financial institutions and payment services invest heavily in security measures such as real-time monitoring systems, encryption, and secure payment protocols to detect unusual activity and safeguard account information. Additionally, consumers are encouraged to monitor their accounts regularly, set up transaction alerts, and report any suspicious activity immediately to minimize potential damage from unauthorized transactions.