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Credit card issuers know more about you than you think

To detect fraud, issuers monitor all your purchases

By

To Her Credit
To Her Credit, Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets.
Ask Sally a question, or read her previous answers in the To Her Credit archive
Question for the CreditCards.com expert

Dear To Her Credit,
I just got a call from my credit card company, asking if I purchased some expensive support hosiery. To my chagrin, the answer was yes -- even though I am only 34. I travel a lot, and I bought it for long airline flights. I'm not sure whether I should be flattered that they thought it odd I would be buying support hose at my age, or if I should be embarrassed that they noticed! How closely do they watch what I buy? Am I being watched whenever I make credit card purchases? -- Pam

Answer for the CreditCards.com expert

Dear Pam,
Yes, you're being watched. Or at least your purchases are. Every day, everywhere you go, someone at your credit card company may be reading your credit card transactions and drawing conclusions about what you spend, where you go, and what kinds of things you buy.

And that, for the most part, is good.

According to a customer representative at American Express, whenever the company sees "unusual activity," they can investigate it. American Express has people in its fraud and identity theft departments working full-time to catch any irregular use of your card. The goal is to stop misuse right then and there.

It doesn't take much to raise a red flag for these people. Say you live in New York City, and all of a sudden you have charges in Iowa. You could get a call from your credit card company asking if that was really you.

If you normally make purchases of up to $400 or so and one day your card shows purchases of $10,000 or more, you'll get a call -- or worse, your credit card charging rights could be suspended by a "false positive." If you normally make two or three purchases a day, but on one day the alert people at your credit card company see 400 charges on your card, you'll get a call, plus your card will be temporarily deactivated!

AmEx says it takes a while for its fraud and identity theft department to get to know you and to predict what you will do. Newer customers are less likely to get a call, because their charging history is so new.  

Established customers rarely go out of pattern, according to the AmEx customer service representative. When established customers are going on trips or are about to buy a large, out-of-the-ordinary item, they call the company and let it know ahead of time.

Since you travel frequently, it could be a bother to call your credit card company every time you pack your bags. According to AmEx, you don't really need to. If you travel regularly, your credit card company knows. After a couple months, it gets used to your spending and traveling patterns.

One would think that nowadays a computer would have your profile on file and it could do all the scanning for unusual items. American Express employees do rely on computers to help them flag unusual items, but there's no substitute for real people sitting at a terminal scanning transaction lists.

I have to admit, it feels funny to think that someone I don't know at all, knows me so well. Somewhere, someone is sitting at a computer screen looking at my transactions, noticing a pattern, and getting to know me. I can see them thinking, "See's Candies again!" or "Reloading your Starbucks card already?"

The AmEx customer service representative assures us, however, that we have nothing to worry about. The company's employees abide by the strictest privacy codes. In fact, he believes that they have never had anyone complain about privacy because customers know the company is only looking out for their interests. Even when we're just buying support hose.

See related: Credit card fraud monitoring can halt legitimate purchases

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Published: July 3, 2008


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Updated: 12-08-2016


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