Yesterday, I was doing the catch up and make sure all the bills are paid on-line thing, and there was an alert message at the top that said that my credit card account was unavailable and that I needed to call a number. I checked quickly, and the bill was paid in full by the specified date, so I was clueless. But I called and eventually got a real person.
And the real person said that there were a bunch of charges on the card which had been denied in the past couple of days. (That is, the bank/card company had refused the charge.) So we went through the charges that had been denied, thousands of dollars in all, but some under a buck even. (I try very hard not to charge small amounts so that I don't cost merchants, especially small merchants, more than makes sense; I want my small merchants to stay in business.)
But none of the purchases I'd made (gas for the car for my camping trip) had been denied, even over the same couple of days.
So somehow, the bank computer system had a good enough way of figuring out what my buying patterns are, and what they aren't, and was able to accurately say "no" to a large number of charges. (A scary large number of charges, to be honest.)
In a way, the fact that the bank knows my purchasing patterns so well is sort of creepy. In another way, it's fantastic, because they'd denied the charges, so we didn't have to resolve anything at all. And someone out there who stole my number (I had the card in hand) didn't actually get to steal either my or the bank's money.
I wonder how the computer system algorithm works?
Does it care about: What sorts of merchants are doing the transaction?
Where the transaction is happening? (and for on-line, I wonder if the thing that goes through to the credit card company reports the internet source number thingy?)
Amounts?
I just got the new card (overnighted to me with no charge; of course, the bank makes plenty of money off me).
Location can definitely play a role (which is why some companies allow/encourage you to warn them in advance if you're taking a trip, especially an overseas one).
ReplyDeleteI've had a credit card company call me to check out purchases I *did* make at least once, but I can't remember what they were. Most of my purchasing is boring/routine enough that it probably wouldn't take much to trigger the algorithm.
I've also ended up with a new credit card # once before because the company detected fraud (a relatively small charge from somewhere in the former USSR region, if I'm remembering correctly).
Some of the above goes back to the '90s, but I expect their algorithms are getting more precise as I provide more data, and it gets easier to crunch. A bit spooky, yes, but also, as you point out, handy at times. So far my experiences with fraud departments have been similarly positive.
I, do, however, devote one credit card account to recurring bills (and only to that purpose), precisely because it's a pain to have to update a bunch of different billing agreements if the credit card # changes. It also gives me a clear idea of the cost of some more-or-less fixed expenses (phone services, internet, utilities before those were included in the co-op fee. etc.).
DeleteThat is scary. I'm glad the bank was paying attention.
ReplyDeleteI've had the bank freeze my account before, both when the charges were fraudulent and when they were legitimately mine (the latter mostly when I've traveled in Africa).
ReplyDeleteI think there are certain patterns that CC thieves commonly use that the algorithms are designed to detect. For instance, they'll often try out a cloned card for a purchase small enough not to require a signature, to see if the card is valid and working, before immediately using it to order a bunch of stuff online, or whatever. In other words, the algorithms are not JUST about detecting deviations from your normal spending habits. But it's still creepy.
I just was notified that the card I use exclusively for online purchased has been hacked and now blocked. But not until *after* in excess of $3000 in illicit purchases had been made, and $1500 of it approved. I will have to formally challenge those and any others that may "clear" despite the block. Ugh. New card, through my little credit union but administered by a large company. Not as attuned as my old card/company, which *always* caught hacks immediately. Apparently they don't all use the same algorithm. Damn. Oh, and the charges were all made in the 24 hours surrounding my birthday. Happy me.
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