Why doesn’t a fraudulent transaction flag when it goes for Authorisation?

If a card has not been reported as lost or stolen the check will be made against the valid card criteria. Where the purchase is ‘Card not Present’ the cardholder is often unaware of the fraudulent use of the card until they receive their account statement and often still has the card in their possession. An issuer cannot raise a chargeback for fraud if a purchase has been processed as a chip & PIN transaction.