Mistakes, Complaints and Official Sources
Credit card fraud in Canada: the $50 liability limit, zero-liability policies and what to do
Your liability for unauthorized credit card charges under the Bank Act and Quebec law, how zero-liability policies work, how to dispute a charge and how to avoid common card scams.
If someone uses your bank-issued credit card without your permission, your liability is limited to $50 under section 627.33 of the Bank Act, unless the bank shows you were grossly negligent in protecting the card or its information (in Quebec, "gross fault"). Once you report the card lost or stolen, you are not liable for any later unauthorized use. Many issuers and networks go further with "zero liability" policies that cover the first $50 too, under their own conditions. Quebec's Consumer Protection Act sets a similar $50 limit before you report the loss. The practical rule is simple: check transactions often and report anything unfamiliar right away.
This guide belongs to credit card mistakes and official sources. It is general information, not legal advice.
What the law says
Bank Act, section 627.33 (federal banks, cards held by individuals):
- liability for unauthorized use is capped at $50, unless you demonstrated gross negligence (gross fault in Quebec) in safeguarding the card or its information;
- after you report that the card is lost, stolen or at risk of unauthorized use, you are not liable for unauthorized use that follows;
- unauthorized use that involves your personal authentication information (such as a PIN) is not, on its own, proof of gross negligence.
The card agreement must also state these rules. The Financial Consumer Protection Framework Regulations require the agreement to say that the maximum liability is $50 unless gross negligence is shown, and that you are not liable after you report the loss or theft.
Quebec. According to the Office de la protection du consommateur, once you notify the issuer you cannot be held responsible for transactions made afterwards; before that, liability for unauthorized use is limited to $50. If the issuer proves you were grossly negligent with your PIN, you may have to cover the losses.
Zero-liability policies
Card networks and issuers advertise zero liability for fraudulent purchases. These policies are voluntary commitments layered on top of the law. Typical conditions include:
- reporting the loss or suspicious transaction promptly;
- having taken reasonable care of the card, PIN and online credentials;
- the account being in good standing.
Read your issuer's policy. If a policy does not apply, the legal $50 limit still does for bank cards held by individuals.
What counts as gross negligence?
The law does not list examples, so each case depends on the facts. Situations that issuers commonly treat as risky include writing the PIN on the card, sharing it with someone, or giving card details and one-time passcodes to a caller. Because the Bank Act says use of the PIN alone is not proof of gross negligence, the bank must show more. If you disagree with a finding of gross negligence, use the complaint process.
What to do the moment you spot fraud
- Call the number on the back of the card (or use the issuer's app) and report the transaction and the card. Lock or freeze the card if the app allows it.
- Note the time and a reference number for your report; it marks when your liability for later use ended.
- Review recent statements for other unfamiliar charges, including small test transactions.
- Change passwords for online banking and any merchant account that stored the card.
- Report to the Canadian Anti-Fraud Centre, and to local police for identity theft.
- Check your Equifax and TransUnion credit reports for accounts you did not open; you can ask for a fraud alert on your file. See credit score effects.
Disputes that are not fraud
Not every problem is unauthorized use. A charge you made, but where the goods never arrived, were not as described or a subscription was not cancelled, is a dispute with the merchant. Card networks have chargeback processes, run through your issuer, with deadlines.
| Situation | First step | Then |
|---|---|---|
| Charge you don't recognize | Check the merchant name; ask household members | Report to the issuer as unauthorized |
| Goods not delivered | Contact the merchant in writing | Ask the issuer about a chargeback |
| Double charge or wrong amount | Ask the merchant for a correction | Dispute with the issuer as a billing error |
| Subscription you cancelled | Send the merchant proof of cancellation | Dispute with the issuer |
In some provinces, consumer protection law gives a specific right to ask the card issuer to reverse a charge for certain distance or online contracts when the merchant fails to deliver or refund. In Ontario, if you cancelled the agreement or demanded a refund under the Consumer Protection Act, 2002 and the supplier did not refund you in time, you can ask the issuer in writing to cancel or reverse the charge and related interest (s. 99); the Consumer Protection Act, 2023 will replace the 2002 Act but is not yet in force (it comes into force on a day to be named by proclamation). In Quebec, ss. 54.14 to 54.16 of the Consumer Protection Act let you ask the issuer for a chargeback on a cancelled distance contract, and the OPC publishes a sample letter. Check your provincial consumer protection office for the conditions and deadlines.
Common card scams in Canada
- Bank impersonation calls and texts asking you to "confirm" a transaction, read out a one-time code or move money. Your bank will not ask for your full PIN or one-time passcodes.
- Fake delivery or toll texts with a link to a payment page.
- Card-not-present fraud after a data breach at an online merchant.
- "Courier" scams where someone comes to collect your card.
When in doubt, hang up and call the number on the back of your card.
Preventing it
- Turn on real-time transaction alerts.
- Use the issuer's app to lock the card when it is not in use, if available.
- Use digital wallets, which typically replace your card number with a token.
- Keep the limit no higher than you need.
- Shred old cards and statements; check statements every month, not just the total.
Frequently asked questions
Does the $50 limit apply to business cards?
Section 627.33 applies to credit card accounts of natural persons used for non-business purposes. Business card protections depend on the agreement.
How long does the bank have to investigate?
The law does not set a fixed period for fraud investigations; the bank's complaint process sets timelines if you complain. Ask for written confirmation of the outcome.
Is fraud on a debit card treated the same way?
No. Debit cards are covered by the Canadian Code of Practice for Consumer Debit Card Services and your account agreement, not by the credit card rules described here.
Will a fraud claim hurt my credit score?
Reporting fraud does not by itself affect your score. Unauthorized accounts opened in your name can, so ask the bureaus to correct them.
Sources
- Justice Laws Website — Bank Act s. 627.33; Financial Consumer Protection Framework Regulations s. 64
- Office de la protection du consommateur — credit card loss, theft or fraud in Quebec
- Canadian Anti-Fraud Centre — reporting fraud and recognizing scams
- Financial Consumer Agency of Canada — protecting yourself from credit card fraud
- Equifax Canada — fraud alerts on your credit file
