Do Banks Refund Scammed Money?

Do banks refund scammed money?

Banks in the United States typically refund money when the transaction(s) were not authorized by you. If your credit card is stolen or your details are used without permission, banks will typically reverse the charges once you report them.

If a criminal gains access to your online bank account and transfers funds without your consent, this is treated as an unauthorized payment. If you notice direct debit payments from your account which you didn’t authorize, you may be able to reverse those payments. If someone alters, forges, or cashes a stolen check linked to your account, most banks will treat it as an unauthorized transaction and refund you after verifying the fraud.

A quick aside on the difference between fraud and scams before we go further:

Fraud means something done without your consent or involvement.

Scams happen when someone tricks you into doing something. These are typically authorized transactions which are much harder to recover because the account holder technically approved the payment. This happens when a scammer tricks you into sending money through a payment app, a wire transfer, or a gift card. For scams by wire transfer, even if you were lied to, the act of entering a password and hitting send is often viewed as a valid order to the bank. Proving you were tricked does not always change the bank’s legal position that you authorized the transfer.

How likely am I to recover scammed money?

Your chances of getting a refund depend on many things: the bank's policies, the type of scam, how the payment method was made, and how quickly you report the fraud.

When am I most likely to receive a refund for scammed money?

If you used a credit card in a scammy transaction, or your credit card info was used without your consent, you’re far more likely to receive a refund. Typically you’re on the hook for a maximum of $50 for a fraudulent credit card transaction.

When am I least likely to receive a refund for scammed money?

If you used cryptocurrency as the payment method in a scam, the likelihood of a refund is extremely small. Cryptocurrencies do not come with legal protections, and transactions usually are not reversible. Wire transfers from your account also have very tight time restrictions for reporting and refunds. For other payment methods, how quickly you report the scam makes a real difference. If you wait too long, the likelihood of a refund quickly fades.

How quickly can I expect a refund?

For credit card fraud, many banks refund within 5–10 business days after confirming the transaction was unauthorized. For debit card fraud, refunds can take longer. Banks usually have up to 10 business days to investigate, though this may be extended. For wire transfer scams, if the bank can stop the payment quickly, you may get your money back within days. If the transaction has been cleared, the recovery process may take weeks.

What do I do now? Where do I start?

If you search for help online, the deluge of information about frauds and scams can seem overwhelming. Here’s a great place to start: the official Federal Trade Commission webpage that describes clearly and concisely the different types of scams, who to contact, and what to tell them.

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