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NuclearWessels's avatar

Who paid for the fraudulent charges on my credit card? and how do they know I didn't visit the strip club?

Asked by NuclearWessels (1040 points ) September 5th, 2012

This happened a few years back. Some fraudulent charges were made on my credit card – two $400 dollar charges to some company “B.G. Enterprises” or something like that. When I called my credit card company about it they informed me this company runs a couple of strip clubs near me.

Everything worked out fine, but it always made me wonder. Some jerk apparently had a great time at the strip club, did the credit card company just pay for that? After my claim is settled do they pursue legal action with whoever made those charges? How do they know I didn’t have a wild night at the strip club and then make a fraud claim?

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8 Answers

Judi's avatar

You were probably not the only one who was scammed. Often, they just don’t pay the company where they charge was made, and sometimes they eat it.
I cancelled a hotel reservation and was still charged a deposit by the hotel. They refused to resolve it so I told American express that I would pay it, but because they were not going to go to bat for me I would cancel my credit card. American Express chose to eat it and keep a good customer.

Pied_Pfeffer's avatar

Having never worked for a credit card company, I cannot accurately answer the question. All I can tell you is that an idiot employee of one of our hotels used a guest’s credit card number to purchase items online and have them shipped to a neighbor’s house. The credit card fraud investigators eventually made the connection. The employee was charged and found guilty.

zenvelo's avatar

They do know if it is not consistent with the way you spend your money. If you were buying adult toys or hanging out at a casino, buying liquor a lot or similar, they might not believe you.

There are also provisions where you can disavow a charge, but if you ever try to charge in similar circumstances, they’ll probably turn down your credit card.

Jaxk's avatar

The first response is for the credit card company to request a copy of the transaction from the billing establishment. If they don’t respond the charges are cancelled. That happens quite often. The billing company then eats the charges. If they respond with good copy, the credit card comapny comes back to you. It doesn’t sound like that happened so first step probably didn’t get a response.

JLeslie's avatar

Depends on the situation. If you are disputing a charge on your bill, the company who rang up the charge finds the receipt with the copy that has a signature. If it is not your signature then it will be investigated further. If there is no signature the business has little leg to stand on. If the card was not magswiped then there might be a keying problem when the cashier typed in the number, and be someone else’s card with a similar number (that happened to me once).

In the end if the credit card company has to eat the charge it is paid for by everyone who owns a card with that bank. We pay for it in or annual fees and interest and the percentage the stores pay when accepting the card. We are basically paying into a pool to cover fraud when it happens, much like how insurance works.

marinelife's avatar

1. You paid for it and I paid for it and all of the other cardholders paid for it in higher interest rates.

2. They have fraud investigative units that make sure you didn’t go to the strip club.

Judi's avatar

Don’t forget that merchants pay a fee for credit card privledges. They pay for it too.

JLeslie's avatar

It’s one of the “costs of doing business.” Similar to how stores know there will be a certain amount of shrinkage (theft).

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