Disputing Unauthorised Payments: A Step-by-Step Guide

Unauthorised payments can be distressing and disruptive. They occur when money leaves your account without your knowledge, consent, or proper agreement. This guide explains your legal rights and practical steps to dispute these payments under the law in England and Wales. It covers the types of unauthorised transactions, time limits, how to raise disputes with banks and card providers, protections under consumer law and financial regulations, and what to do if a dispute remains unresolved.

This article draws on up‑to‑date guidance from regulators such as the Financial Conduct Authority (FCA), the Financial Ombudsman Service, payment regulations, and industry practices to give clear, actionable information to consumers, students, and solicitors alike.

What Is an Unauthorised Payment?

An unauthorised payment is a transaction from your bank, credit, or debit account that you did not agree to, did not initiate, or did not approve. This can include:

• Transactions made with stolen or misused card details.
• Payments you did not recognise on your bank statement.
• Withdrawals or transfers you did not authorise.
• Payments made without your consent via online banking or mobile apps.

Under UK regulations, banks and payment service providers must refund unauthorised payments if they are genuinely unauthorised and you report them promptly. There are legal rules governing how and when this must happen.

Step‑by‑Step: What to Do When You Discover an Unauthorised Payment

Step 1: Review Your Statement Promptly

Check your bank or card statements regularly. If you identify a payment you did not authorise:

• Note the date, amount, payee name, and transaction type.
• Confirm that the transaction is genuinely unauthorised (for example, not a subscription you forgot).
  Prompt action strengthens your position for a successful dispute.

Step 2: Contact Your Bank or Payment Provider Immediately

As soon as you notice the transaction:

1. Report the unauthorised payment to your bank or card issuer via their official contact channels (phone, app, online banking, or branch).
2. Provide details and explain that you did not authorise the payment.

Under the Payment Services Regulations 2017, banks must refund unauthorised payments and correct your account unless they can prove you authorised the transaction or were grossly negligent.

Time limit: Inform your bank within 13 months from when the payment was made. Many banks request notification much sooner.

What Happens After You Report It?

Refund and Investigation

Once you report an unauthorised payment:

• Your bank should investigate the claim.
• They may ask for information or a signed declaration about what happened.
• If valid, the refund should normally be credited by the end of the next business day, including any interest lost or charges incurred.

Limits on Your Liability

If you lose your card or details and fail to report this promptly, you may have some liability (often a maximum of £35) for unauthorised use before reporting. If it wasn't possible for you to detect the loss or the bank is at fault, you typically pay nothing.

Dispute Routes for Different Types of Payments

Bank Transfers (APP Fraud)

Some unauthorised payments are authorised push payments (APP), where fraudsters trick you into sending money knowingly (for example, via a scam). The rules changed on 7 October 2024, requiring many banks and payment providers to reimburse customers for APP fraud under Payment Systems Regulator (PSR) rules, provided the payment was made through Faster Payments or CHAPS within the UK.

• Reimbursement can be up to £85,000.
• Your provider may keep up to £100 of the claim amount.
• Exceptions apply if you were not sufficiently careful or were complicit.
• If unhappy with the outcome, you can escalate to the Financial Ombudsman Service.

Debit and Credit Card Disputes

If the payment was made via card, you have additional mechanisms:

Chargeback

• A chargeback is a process by which your card issuer can request the merchant's bank to reverse a transaction.
• Banks apply the rules of card schemes (Visa, Mastercard, etc.).
• Chargebacks are typically available when the transaction is unauthorised, duplicated, or incorrect.
• You usually must contact your bank within a set period (often around 120 days) of the transaction date.

Section 75 (Credit Cards Only)

• If the transaction was over £100 and under £30,000 on a credit card, you might be able to claim under Section 75 of the Consumer Credit Act 1974.
• This provides a legal claim against the credit provider for misrepresentation or breach of contract by the merchant.
• It is separate from unauthorised payments but relevant where payments are disputed because goods or services weren't delivered or were defective.

What If Your Bank Refuses Your Claim?

If your bank or payment provider declines your claim:

1. Make a formal complaint in writing following the bank's complaint procedure.
2. If the bank does not resolve the matter within eight weeks, or you remain dissatisfied with their response, escalate your complaint to the Financial Ombudsman Service.
3. The Ombudsman can investigate independently and make a binding decision.

Evidence and Records That Help Your Case

When disputing a payment, keep:

• Screenshots or copies of statements showing the unauthorised transaction.
• Records of when and how you reported the issue.
• Correspondence with your bank or card provider.
• Any police reports if fraud or theft is suspected.
  Clear evidence improves the likelihood of a successful dispute and assists escalation to the Ombudsman if needed.

Common Scenarios and Practical Advice

Forgotten Subscriptions or Recurring Charges

Sometimes payments appear unauthorised but are tied to forgotten subscriptions. Before raising a dispute, check:

• Emails or paperwork for recurring payments.
• Subscription accounts linked to your card.
  If it's a valid subscription, you may need to cancel the service rather than treat the transaction as unauthorised.

Identity Theft and Online Fraud

If your personal details were stolen or misused:

• Report to Action Fraud and the police.
• Notify your bank immediately.
• Freeze and replace cards and change security details.
  Identity theft can form part of an unauthorised payments dispute and may require additional documentation.

Key Takeaways

Disputing an unauthorised payment in the UK involves:

• Acting quickly by notifying your bank or payment provider.
• Using statutory protections under Payment Services Regulations 2017 to seek refunds.
• Exploring chargeback or Section 75 options for card payments.
• Keeping full records and escalating unresolved disputes to the Financial Ombudsman Service.

Understanding your rights and the correct procedures helps protect your finances and ensures that banks and merchants handle disputes fairly.