What is a zero-liability policy?

How does a zero-liability policy work?

The policy answers a single question: who carries the loss when a payment is made on a card account without the cardholder's authority. Under a policy of this kind the answer is the issuer rather than the holder, provided the holder has done what the agreement asks. That makes it a promise about money moving through the account, not a description of how a card behaves day to day and not a feature of any loyalty programme.

The conditions matter because the issuer has to be able to establish that the transaction was not authorised before it treats the charge as its own loss. Reporting is how that process starts. Chase's card education pages set out the instruction plainly — a cardholder who sees unauthorised charges, or who believes the account has been compromised, should contact the bank right away to report fraud. [2]

Because the promise is written into the cardholder agreement, its exact wording, the notification it requires and the exceptions it allows vary between issuers and between markets. Statutory protection for cardholders also differs from country to country, so the agreement and local consumer law together decide what a particular cardholder can recover; a general description of the concept is no substitute for either document.

How is fraud liability different from a chargeback?

A chargeback is the card networks' process for reversing a payment that the cardholder did authorise but which went wrong — goods that never arrived, a service that was not provided as described, a bill charged twice. A zero-liability policy deals with the opposite situation: a payment the cardholder never authorised at all. The two can meet at the edges, because a cardholder who does not recognise a charge may not know which case applies, but they are assessed under different rules and a chargeback claim is not a fraud claim.

The division shows up in how issuers describe their benefits. Barclaycard lists protection on purchases over £100 as a feature that comes with every UK credit card, with conditions applying. [3] That benefit responds to a problem with a purchase; it is not a statement that unauthorised use of the account will be refunded. The two protections sit in different parts of the same account and are triggered by different events.

Is zero liability the same as purchase or theft insurance?

Purchase protection and theft protection are insurance-shaped benefits: they respond to loss of, or damage to, the things a cardholder bought, and they are defined in their own benefit terms. A zero-liability policy does not respond to lost property at all; it responds to charges on the account. A stolen bag that contained a card can therefore raise two questions at once — what was spent on the card without authority, and what the purchase or theft benefit will pay for the bag — and each is answered separately.

Those benefits also depend on how the purchase was paid for. American Express's Membership Rewards terms note that a flight booked with frequent flyer miles is not charged to the card, so the cardholder does not receive the insurance and other benefits that may apply when a flight is charged to the card. [5] That rule concerns which protections a payment method brings with it, not whether a charge was authorised.

Exceptions and limits

• Report when you notice it. Chase's guidance is to contact the bank right away on seeing unauthorised charges or on believing the account is compromised, rather than to wait and query the charge later. [2]
• Purchase problems run on benefit terms. Cover for purchases over £100 on UK credit cards comes with conditions attached, as Barclaycard describes it, and a claim under it is not the same claim as unauthorised use. [3]
• Uncharged purchases lose card benefits. A reward flight booked with miles is not charged to the account, so the insurance and other benefits that attach to charging a flight do not apply. [5]
• Reward balances follow programme terms. American Express's Membership Rewards terms provide that if it cancels a Product for any reason, the cardholder loses all the points in the Rewards Account, subject to stated exceptions. [5] A card account problem and a points balance are therefore handled under different documents.
• Country and contract come first. Statutory protections differ between countries and issuer wording differs between agreements, so the terms for the specific account decide the scope of the promise and any exceptions to it.

Frequently asked questions

What should I do if I see an unauthorised charge on my card?

Chase tells cardholders who see unauthorised charges, or who believe their account has been compromised, to contact the bank right away to report fraud. [2]

Does a zero-liability policy cover a purchase that never arrived?

That is a dispute about a payment you made, so it runs on chargeback or purchase-cover rules rather than fraud rules. Barclaycard describes protection on purchases over £100 as a feature included with every UK credit card, with conditions applying. [3]

Are purchase protection and theft protection part of zero liability?

No — they are separate benefits that respond to loss of or damage to bought items, and they can depend on the purchase being charged to the card. American Express notes that a flight booked with frequent flyer miles is not charged to the card, so its insurance and other benefits do not apply. [5]

Is the protection the same in every country?

Statutory cardholder protection differs by country and issuer terms differ by agreement, so read the cardholder agreement for the account alongside local consumer law.

Related pages

Cardholder agreement, chargeback, lost or stolen card, purchase protection, theft protection, and the full glossary.

Sources

Sources accessed on 18 October 2026. The zero-liability terms of other card issuers, and the statutory rules of individual countries, are not covered here; the cardholder agreement for the account in question sets out the promise and its conditions.

1. Chase credit card education and resources, checked 18 October 2026
2. Barclaycard credit cards, checked 18 October 2026
3. American Express Membership Rewards program terms and conditions, checked 18 October 2026