When Banks are too Alert to Stolen Credit Cards

Sometimes, your bank can take too much care treating you right. Consider this scenario: you are in a celebratory mood one day, and you decide to take an impromptu drive down to the South Carolina furniture store area that you’ve heard so much about.

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You take your credit card out for some air. After a bit of shopping at a couple different stores, you decide to stop for some coffee. You take out your credit card and it’s declined by the machine. The cashier gives you a condescending little smile as if to say, “Don’t worry, we can’t all be expected to be financially responsible”.

You aren’t someone who uses your credit card often; how did you manage to go over your spending limit? The answer is, you didn’t. Your bank, a little overzealous about the whole stolen credit cards problem saw that you were doing something unusual, charging things to your card in South Carolina. The bank just froze your card.

It used to be that banks suspected stolen credit cards only if they saw some truly unusual spending patterns -like if they saw you charge things to your card in the world capitals of credit card fraud, Russia and China, all of a sudden. These days though, they can try to rush to your defense for the smallest deviations from your normal patterns of behavior. If you try to withdraw money from an ATM in an area of your town that you’ve never been to before, that can be a trigger.

Perhaps they have some reason for being jumpy like this. They lost about $10 billion to credit card fraud last year alone. And they have no real idea how to put an end to this. Of every 15 cases of spending that they flag as suspicious, only one actually turns out to be actual fraud. They cast a wide net.

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Even so, the system they use to try to recognize spending done on stolen credit cards really is amazingly sophisticated. Most of the time, they use a fraud detection program run by the credit score company FICO that keeps an eye on millions of cards in real time to see if there is anything unusual about the spending you’re trying to put through. They may flag 15 times as many cases as they should; but they do manage to catch thieves 50% of the time. Which is an amazing record.

So what kinds of credit card use are likely to get you flagged? To begin with, if you don’t usually use your credit card in another country, doing that for the first time would be a great way to get into trouble. Using your credit card at some electronics stores, jewelry stores and other places where they sell stuff that criminals can easily fence, are considered risky too. Use an ATM that’s not in a bank vestibule and you could get in trouble.

Using your card for a small app or music purchase is considered risky as well (because thieves with stolen credit cards try and test every card in this way to see if it works). But they can all merely use the few simple procedures so as to not inconvenience their customers. Some banks like Chase will actually send you a text message or call you to ask if an unlikely looking purchase is for real.


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