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Credit card fraud: you’re protected—most of the time

When tricksters steal your card or banking details, you are usually off the hook for the losses. But you still need to be vigilant.

Woman sitting at desk looking at laptop holding her credit cardReport any loss or theft of a credit card right away and also take action if you see find payments on your statement that you don’t recognize (Getty Images/martin-dm)

Credit card fraud is big business in Canada, and it’s one that is all-too-familiar to many Canadians. For example, 86 per cent of those who responded to CPA Canada’s 2019 fraud survey said they are aware of credit card fraud and almost 39 per cent refuse to use their credit card with some merchants and establishments.

Fortunately, cardholders in Canada are generally protected against liability for credit card fraud. But you still need to be vigilant: there are cases where you could run into trouble if you aren’t careful.


What do current laws and regulations have to say about liability? According to Section 12 of the Cost of Borrowing Regulations associated with the Bank Act, the maximum liability for unauthorized use of a credit card issued by a federally regulated financial institution is $50. This means that if a consumer is found liable for a transaction, they must pay the lesser of $50 and the maximum set by the credit agreement.

Above and beyond the $50 maximum liability, Visa, MasterCard and American Express offer additional protection through their zero liability policies. But it’s important to remember that those policies have conditions—especially when it comes to timelines and personal identification numbers (PIN).

For example, as the Mastercard website points out, you need to report any loss or theft to your financial institution as soon as you become aware of it. You also must have used “reasonable care” in safeguarding your card. As the website explains, this includes not contributing to any unauthorized use, and safeguarding any related PIN or password.

It stands to reason that you should report any loss or theft right away. (You should also take action if you see find payments on your credit card statement that you don’t recognize. See Does a credit card charge look suspicious to you? Here’s what to do.)


You should not make it easy for your card to be stolen or used without your permission. But how can you safeguard your PIN? First, choose one that cannot be easily guessed. As the Financial Consumer Agency of Canada (FCAC) explains, “Most, if not all, credit card agreements will state that using your birthdate or telephone number is not allowed to be used for your PIN.” 

Also, it’s also important to know that when conducting an investigation into an unauthorized transaction, the bank may ask you whether you have shared your PIN. If you have, you may be found liable for unauthorized transactions, says FCAC.

When it comes to credit card fraud, then, it’s always better to be safe than sorry. While FCAC says that banks are expected to investigate all unauthorized transactions to determine, based on a balance of probabilities, whether they are a result of circumstances beyond the cardholder’s control (such as shoulder-surfing, coercion, etc.), you still need to look out for yourself.

As Faisal Butt, an adviser with Edward Jones, puts it, “No one wants to become the victim of a theft. But scammers are out there, looking for their next victims.

“Protect your personal information. Don’t give out information about yourself over the phone, via email, or over the internet unless you know the recipient is legitimate. Also, be mindful of the information you put on social media, which can be a treasure trove for would-be scammers.”


Canadians are increasingly worried about fraud and identity theft, according to CPA Canada’s 2019 fraud survey. To find out more about how to safeguard yourself, see Protecting you and your money: A guide to avoiding identity theft and fraud.


When a fraudulent credit card transaction occurs, it’s important to note that liability falls on the bank/issuer—not the card company.

Visa, Mastercard and other credit card companies provide a network and payment solution. (For example, Visa facilitates electronic funds transfers throughout the world, most commonly via Visa-branded credit cards, debit cards and so on.) Each time the card is swiped, the merchant pays a percentage. However, this might also be built into the price charged to the consumer, says one industry insider who prefers to remain anonymous.

The banks, on the other hand, issue the cards and make money on the interest on the balance outstanding, says the insider. “However, the risk is that the consumer doesn’t pay,” he adds.

“However, the risk is that the consumer doesn’t pay,” he says. 

This is a risk that is seems to be taken into account when decisions are made by the banks. As Jennifer Fiddian-Green, CPA, who leads the national forensic and dispute resolution advisory practice at Grant Thornton, puts it, banks are interested in supporting customers (primarily individuals) to trust and use credit and payment card systems. “So when decisions are made about whether or not to cover the costs of fraud (e.g., to make the consumer whole), we often see that individuals are supported as long as they have executed on the basics of taking care of their cards and data.”