Who paid for the fraudulent charges on my credit card? and how do they know I didn't visit the strip club?

You were probably not the only one who was scammed. Often, they just don’t pay the company where they charge was made, and sometimes they eat it.
I cancelled a hotel reservation and was still charged a deposit by the hotel. They refused to resolve it so I told American express that I would pay it, but because they were not going to go to bat for me I would cancel my credit card. American Express chose to eat it and keep a good customer.

Having never worked for a credit card company, I cannot accurately answer the question. All I can tell you is that an idiot employee of one of our hotels used a guest’s credit card number to purchase items online and have them shipped to a neighbor’s house. The credit card fraud investigators eventually made the connection. The employee was charged and found guilty.

They do know if it is not consistent with the way you spend your money. If you were buying adult toys or hanging out at a casino, buying liquor a lot or similar, they might not believe you.

There are also provisions where you can disavow a charge, but if you ever try to charge in similar circumstances, they’ll probably turn down your credit card.

The first response is for the credit card company to request a copy of the transaction from the billing establishment. If they don’t respond the charges are cancelled. That happens quite often. The billing company then eats the charges. If they respond with good copy, the credit card comapny comes back to you. It doesn’t sound like that happened so first step probably didn’t get a response.

Depends on the situation. If you are disputing a charge on your bill, the company who rang up the charge finds the receipt with the copy that has a signature. If it is not your signature then it will be investigated further. If there is no signature the business has little leg to stand on. If the card was not magswiped then there might be a keying problem when the cashier typed in the number, and be someone else’s card with a similar number (that happened to me once).

In the end if the credit card company has to eat the charge it is paid for by everyone who owns a card with that bank. We pay for it in or annual fees and interest and the percentage the stores pay when accepting the card. We are basically paying into a pool to cover fraud when it happens, much like how insurance works.

1. You paid for it and I paid for it and all of the other cardholders paid for it in higher interest rates.

2. They have fraud investigative units that make sure you didn’t go to the strip club.

Don’t forget that merchants pay a fee for credit card privledges. They pay for it too.

It’s one of the “costs of doing business.” Similar to how stores know there will be a certain amount of shrinkage (theft).