How Do Credit Card Companies Catch Fraud?

by Craig Berman
If you're a fraud victim, you'll need to destroy your credit card.

Credit card companies have an incentive to catch fraud quickly, as every unauthorized transaction has the potential to reduce their bottom line. Their efforts can save you the stress of an unexpectedly high bill that results in hours spent on the phone trying to get unauthorized charges removed from your account. However, they also can come as an unpleasant surprise if your legitimate use of the card draws the attention of the fraud department.

Shopping Habits

One pattern that draws the attention of the fraud department and helps it catch fraudulent activity is a small purchase followed almost immediately by a large one. Thieves often make a small purchase first, ideally one that doesn’t involve face-to-face contact with a cashier, to confirm that a stolen card is still active before buying a big-ticket item. Swiping the card at a gas station, followed quickly by the purchase of expensive electronics, would be one series of transactions that a fraud department might flag. Multiple purchases over a short timespan also draw attention, since that can indicate a desire to exhaust the credit limit quickly before the theft is noticed.

Customer Usage Patterns

Credit card companies track how customers use their cards, and deviations from your usual shopping pattern can signal fraud. For example, if you typically use your credit card only to buy gas and the company notices that the card has been used to buy $2,000 worth of jewelry, that’s probably going to draw the attention of the fraud department. If you’re a new customer, your purchases are compared to those made by similar demographic groups in your zip code to determine deviations from the norm that may indicate a compromised account.

Strange locations

Sudden usage overseas or in a different geographic area than usual also can be an indicator of fraud. This is particularly true for usage in two areas in a short window of time. Many times this keeps a card used legitimately in Chicago from being fraudulently used in Paris. But if you share a card with your parents, your dad’s usage to pay the electric bill at home could cause your own transactions on your spring break trip to be denied.

Better Safe than Sorry

The aggressive nature of fraud detection systems can result in a legitimate customer having a purchase denied or an account suspended or canceled for no cause. Some credit card companies will try to alert you when it takes such actions, but you may not find out until your card is denied and you contact the issuer for an explanation. To prevent this, call your issuer in advance when you know you'll be using the card in a different way, such as before embarking on overseas travel.

Video of the Day

Brought to you by

References

Photo Credits

  • Jupiterimages/Polka Dot/Getty Images
Cite this Article | raiffeisen-cards.ru A tool to create a citation to reference this article Cite this Article

Related pages


filling out a moneygram money orderdeed of release and reconveyancemezzanine formswhat form do i fill out for self employedcharity for needy familiesblank deposit slipopm federal disability retirementmagnetic strip on credit cardcalculate payoff amount on mortgageapply for ebt washingtoncoinflation silver dollarbulliondirect.comhow to write 501c3how to pawn a ringmaximum age for ira contributionwhat is the difference between ssi and social securityhow much are craftmatic adjustable bedstrustor meaninghow to evict an unwanted house guesthow to calculate the dividend growth rateeviction notice kentuckynyc registry of deedswhere is my adjusted gross income on my w2how to calculate dividend yield ratiotarget charitable donation requestglobal days for cpt codeswheres my state refund indianadefinition of a sinking fund401k rollover tax implicationswhat is a hipaa certificatehow to catch a credit card theftblue chip company pokercigna hmo vs ppocoverdell withdrawalirs injured spouse instructionsdoes homeowners insurance cover fencesgoody's credit card paymentpuerto rico irsgovernment grants for momsredeeming series ee bondsmedicaid in texas for adultsjunk yards to sell my carssi emergency paymentshould i take the lump sum or annuitytrin tradinghow to legally get out of a rental leasemedicaid lost card replacementmerchant marine footballcash back credit cards taxable incomewamu com chaseunit trust mutual fund differencedoes masshealth cover dentalhow to calculate beta financewhat happens when your bank account is overdrawnwebster bank routing numberhow to get va loan certificate of eligibilitysafest places to retiredebit card designs bank of americaactivate boa cardesthetician grantsetrade and penny stocksdisabled parent scholarshipsmedicaid eligibility nevadarollover futuresannuity powerballwhats a pell granthow to compute ending retained earningsseller assist fhahow much money do you receive for donating plasmaare plant assets tangible or intangiblecore deposit meaningrental checklist walk throughdeed of trust floridaproof of renters insurance