Are cardholders responsible for any financial losses associated with their credit cards?

by The FindLaw Team

Anecdotally, many readers are probably using physical cash less, and are instead more reliant on either a debit or credit card when making purchases. The flipside of the convenience of using a card, is that they may also be open to unauthorised use by another person without the consent of the cardholder. Therefore, if a cardholder incurs financial loss either from losing their card, theft or misuse: What happens? Good question, and if you want to learn more, read on.

Unauthorised transactions not by a user

Chapter C of the ePayments Code (the Code) deals with liability for unauthorised use, and cardholders are not responsible for any losses if:

  • the loss was caused by the fraudulent or negligent conduct of an employee, or merchants linked to the system of the financial institution;
  • the losses were the result from transactions initiated by cards that were forged, faulty or had expired;
  • the losses were the result of transactions initiated by the card or PIN before the cardholder received it.


What happens if a person did not receive their card?

Generally speaking, delivering the card to the right address does not signify receipt. Therefore, in the event of a dispute relating to receipt of the card or PIN, the presumption is that the card was not received unless proven otherwise by the card issuer.

Cards that have been lost or stolen

Losses after providing notice of lost or stolen card: a cardholder who has informed the card issuer that the card has been lost or stolen, or that the PIN security has been compromised, the card holder will generally not be responsible for any losses incurred after that.

Losses before providing notice of lost or stolen card: the liability of any losses by a cardholder before informing a card issuer that the card has been lost or stolen, is dependent on whether the cardholder contributed to the loss. If the cardholder did not contribute to the loss, but their PIN was used, the cardholder’s liability does not exceed whichever of the following is least:

  • $150
  • the balance of the account
  • actual loss at the time of notifying the card issuer.

Cardholder contributed losses: if a cardholder has voluntarily or negligently disclosed their PIN or passcode, or kept a record of their PIN or passcode in close proximity to the card when it was lost or stolen, the person is liable for whichever is least:

  • actual loss;
  • the balance of the account;
  • the maximum amount entitled to be withdrawn in the period prior to notifying the card issuer.

Cardholders may also be deemed to have contributed to a loss if they fail to disclose to the card issuer a lost or stolen card in a timely manner, or have knowledge that their card is being misused. In such an instance, the cardholder will be liable for actual loss that is limited by whichever amount is less:

  • the balance of the account;
  • the amount the cardholder could have withdrawn.



For PayPass or tap-and-go payments, the Code still protects cardholders from any losses incurred for unauthorised transactions.


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