Fraud is a global issue affecting millions. Awareness of its prevalence encourages individuals to take responsibility for their card security. Unauthorized transactions are a major warning sign that card information may have been compromised.
TransUnion reported that 8.7% of all digital fraud attempts worldwide occurred in the Philippines. This highlights the importance of vigilance in protecting personal financial data.
If unauthorized transactions occur, action can be taken to address the situation effectively. Proactive steps are essential when shopping online. Below are practical tips to ensure better security.
What Is Fraud?
Fraud involves deception aimed at gaining something of value. It becomes a crime when there is intentional misrepresentation of facts or concealment of information to harm another person or organization.
For example, lying to deprive someone of money or property qualifies as fraud under legal definitions like Black’s Law Dictionary.
Why Does Fraud Happen?
The Fraud Triangle offers a widely recognized explanation for fraudulent behavior. This concept, introduced by criminologist Dr. Donald Cressey, identifies three key factors: opportunity, pressure, and rationalization.
Dr. Cressey’s research on embezzlers, whom he referred to as “trust violators,” highlights these elements as central to understanding why individuals commit fraud.
What Are Unauthorized Transactions?
Unauthorized transactions are charges or purchases made using someone’s payment card without their approval. These often occur when card details are accessed illegally, such as theft, phishing, or scams.
Smaller unauthorized charges may go unnoticed but can signal larger fraudulent activity.
Regularly checking transaction history can help detect and address these issues early. Identifying them quickly reduces risks and protects financial assets effectively.
How to Spot Unauthorized Transactions on Your Account
Protecting against unauthorized transactions requires vigilance and consistent monitoring. Follow these key steps to identify and address suspicious activity effectively.
Monitor Your Transaction History Regularly
Review your transaction history frequently using your banking or payment app. Unfamiliar or unexpected charges, even small ones, may indicate unauthorized activity.
Fraudulent transactions often begin with minor test purchases before escalating. Regular checks allow you to detect issues early and take prompt action.
Identify Unusual Spending Patterns
Look out for multiple small transactions at the same merchant, charges from unfamiliar locations, or sudden spikes in spending.
Transactions occurring at unusual times or involving unknown merchants also require immediate attention. Recognizing these patterns quickly minimizes the risk of further unauthorized activity.
Enable Transaction Notifications
Activate real-time transaction alerts to stay updated whenever your account is accessed. Notifications help you verify each charge as it occurs. If any purchase seems unauthorized, take immediate steps to investigate and resolve the issue.
4 Urgent Steps to Take When You Spot Unauthorized Transactions
If you notice unauthorized transactions on your account, swift action is essential to minimize potential damage. Here are the key steps to follow:
1. Freeze Your Account or Card
As soon as you identify unauthorized transactions, temporarily freeze your account or payment card using your banking or payment app.
This action blocks further charges while the issue is being resolved. Once the situation is addressed, you can unfreeze the account.
2. Report the Suspicious Transactions
Contact your bank or payment provider’s customer support immediately.
Provide specific details about the suspicious transactions, such as the date, amount, and merchant. Reporting promptly lets the provider investigate and take protective measures to secure your account.
3. Monitor Activity Closely
Keep checking your account for additional suspicious transactions after reporting the issue.
Enable transaction notifications if they aren’t already active. If you notice further unusual charges, report them right away to prevent further unauthorized access.
4. Update Your Security Credentials
Change your account password to strengthen security. Use a strong, unique password that’s not used for other accounts.
Enable two-factor authentication (2FA) if available for an added layer of protection. This reduces the chances of future breaches.
Types of Suspicious Activities or Transactions
Identifying suspicious transactions is vital in detecting and preventing financial crimes like money laundering. Below are common types of suspicious activities across various financial practices.
Money Laundering Through Cash Transactions:
- Unusually large cash deposits are inconsistent with the depositor’s usual business activities.
- Substantial increases in cash deposits without clear reasons, followed by rapid transfers to unrelated accounts or locations.
- Small, frequent cash deposits using multiple credit slips collectively add to significant amounts.
- Transactions for company accounts are primarily conducted in cash rather than standard commercial instruments like checks or bills of exchange.
- Frequent cash payments for money transfers, bank drafts, or negotiable instruments.
- Large exchanges of low-denomination notes for higher denominations.
- Frequent currency exchanges or deposits with counterfeit notes or forged instruments.
- Unusual increases in cash transactions at specific branches.
- Large transfers of funds overseas, paid for in cash.
- Significant cash deposits through night safes to avoid direct contact with banking staff.
Money Laundering Through Bank Accounts:
- Maintaining numerous trustee or client accounts inconsistent with the business’s type or volume of activity.
- Multiple accounts used for small cash deposits that collectively represent large amounts.
- Accounts with no normal personal or business-related activities but showing significant, unexplained sums.
- Reluctance to provide complete or accurate information during account setup.
- Use multiple accounts across different institutions within the same area, consolidating funds before transfer.
- Payments match recent cash deposits, especially on the same day.
- Large cash withdrawals from dormant accounts or after sudden large foreign credits.
- Simultaneous large cash transactions or foreign exchanges at multiple tellers.
- Frequent deposits into safe deposit boxes, especially sealed packets.
- Professional firms or companies make large deposits into client or trust accounts, with immediate transfers to other accounts.
- Avoidance of standard credit facilities or other valuable banking services.
- Numerous individuals are depositing funds into a single account without a clear explanation.
Money Laundering Through Investment Transactions:
- Purchases of securities held in safe custody without apparent reason.
- Requests for investment management services where funds’ origins are unclear.
- Large or unusual settlements of securities in cash.
- Buying and selling securities with no clear purpose or rationale.
Money Laundering Through Offshore Activity:
- Customers referred by institutions in high-risk countries for drug trafficking.
- Use of trade finance methods to move funds between unrelated countries.
- Building large balances inconsistent with known business turnover, followed by transfers abroad.
- Unexplained foreign currency drafts or frequent requests for negotiable instruments.
- Frequent deposits of travelers’ checks or foreign drafts from overseas.
Money Laundering Involving Employees or Agents:
- Employees exhibiting sudden changes in behavior, such as avoiding vacations or displaying lavish lifestyles.
- Agents conducting transactions where the ultimate beneficiary is hidden.
Money Laundering Through Lending:
- Customers unexpectedly repaying problem loans.
- Borrowing against unclear or inconsistent assets.
- Financing requests involving unclear customer contributions, especially in property transactions.
Suspicious Patterns in Transactions:
- Numerous securities transactions across jurisdictions.
- Transactions inconsistent with normal financial markets or investor activity.
- Buying and selling securities without clear purpose or at off-market prices.
- Frequent small transactions of the same security, sold later as a single large transaction to a different account.
Company Formation and Management:
- Purchasing companies without clear commercial purposes.
- Disproportionate sales invoices compared to the goods’ value.
- Unusually large cash payments for activities typically involving checks or drafts.
- Frequent use of nominees, excessive secrecy, or complex group structures without clear justification.
- Subsidiaries or companies with no clear operational purpose or consistent financial losses.
- Frequent unexplained transfers between accounts in various currencies.
Keeping an Eye on Your Transactions
Staying vigilant about your financial transactions is essential for preventing and addressing unauthorized activity.
Regularly reviewing your transaction history, enabling real-time alerts, and identifying unusual spending patterns can help protect against unauthorized charges and potential fraud.
If unauthorized transactions occur, take immediate action. Contact your financial institution or card provider, freeze your account or card, file a dispute for the charges, and continue monitoring your account for further suspicious activity.