Making sense of confusing credit card statements
Spotting fraud hard with so many unfamiliar, but legitimate, business names
By Michelle Crouch | Published: November 20, 2015
You've probably seen a transaction you didn't recognize on your credit card statement and wondered, 'What the heck is that?'
If you later realized it was actually a legitimate purchase that you made -- but just didn't recognize at first -- welcome to the club.
With the explosion of online merchants, third-party transactions and companies doing business under different names, a growing number of customers are disputing legitimate credit card transactions simply because they don't recognize them, payments experts say.
More than half of claims made by consumers, 52 percent, are categorized as "unrecognized transactions," according to research by CEB TowerGroup. Some are actual fraud, but many are the result of confusing or vague information on the statement, says Brian Riley, principal executive adviser with CEB TowerGroup.
Because consumers are using credit more often and to make even very small purchases, it's harder for them to keep track of when and where they've used their cards, Riley says. The migration to online commerce has also played a role, with between 2008 and 2014.
"Ten years ago, almost everything you put on your card was from a brick-and-mortar store in your town," says Robert Siciliano, a security expert with BestIDTheftCompanys.com who consults with credit card companies. "Today, more consumers than ever are using cards for virtual purchases. And with so many more merchants competing for your business, you may not pay attention to the name of the outlet you're buying from."
Unfamiliar business names
Even if you know the name of the company you did business with, transactions often aren't listed under that name. A Shell gas station may come up as SHO No. 15 on your card. If you buy a Coke from a vending machine in one city, your statement might list a vending company in another city where its main office is located. And a store or restaurant may be listed under its legal or corporate name rather than the name over its door.
If you use your credit card at certain Burger King franchises in Frederick, Maryland, for example, you''ll see "JEFFREY GIANGRANDE CORP" on your statement -- not Burger King.
"I think it's silly to have it listed that way because most people won't recognize it," says Maria Moser, who noticed the corporate name on her statement after she ate at Burger King last month. "The only reason I knew what it was is that most of the Burger King restaurants are owned by the father of someone I went to high school with."
Confusing statement descriptors often happen because parent corporations own, or have franchise arrangements with, smaller merchants with different names, Siciliano says. "If a restaurant group owns 15 different restaurants processing credit cards, they don't want to pay to set up 15 different merchant accounts. It may be more efficient and cost-effective to set up one account in one city and use it for all of them."
The explosion of third-party payment processors such as Stripe, Braintree, PayPal and Square in recent years has also contributed to the problem, says Chris Uriarte, chief strategy & payments officer at Vesta Corp., a transaction provider.
Those processors allow small businesses and individuals to accept credit cards without setting up a merchant account and going through underwriting. But sometimes only the payment provider is listed on your statement -- and that can be confusing.
"My gardener uses Braintree to process credit card payments," Uriarte says. "So I will be sitting at dinner and this thing from American Express will pop up saying I have a charge from Braintree.com. The first time it happened, I wondered what that charge was."
Limited space on statements
Statements typically have little information to jog a customer's memory about a purchase, and that's partly because retailers don't get a lot of space. The descriptor field has traditionally allowed 23 characters, but in the last five years, many issuers have shrunk it even more on their online and mobile statements, says Matthew Katz, CEO of Verifi.
Now, character limits range from 18 to 23, depending on the card issuer, Katz says: "Trying to include the name and location of the merchant and the product they sell in less than 18 characters? That's almost impossible."
Still, the payments industry and savvy retailers are working on solutions. When too many customers dispute a transaction because they don't recognize it (called a chargeback), that eats into a retailer's profits. So they are working on ways to make your statement more clear.
"We advise using a key word that will trigger the memory of the consumer," Uriarte says. "So if the name of your bakery is 'Good Morning Fort Lauderdale,' we'd recommend having 'Good Morning bakery' on your statement. If you're an artist, your descriptor shouldn't just be your name. It should say 'Art by (your name).'"
Many companies are also including contact information, such as a phone number or Web address, in their descriptors.
A few years ago, retailer 37signals reduced their chargebacks by 30 percent simply by including "37signals-charge.com" in their descriptor. When customers visited the URL, it listed some of the products the company sold, along with different names it did business under. "By using a Web address, people could learn quickly what the charge was for," says CEO Jason Fried. (The business has since changed its name to Basecamp.)
What to do if you don't recognize a transaction
If you see something on your statement you don't recognize, do a little research before you dispute the transaction, experts say. That can save you time in the long run, since a chargeback requires time and paperwork.
"Most of the time, if you do a quick Google search, you can figure out what it is," Uriarte says.
Call the phone number for the company if there's one listed with the transaction, and also ask your credit card company for more information. "They typically have history about the transaction that doesn't appear on your statement," Siciliano says. "They may have the name of the actual storefront or the domain name and the category of the merchant. They may also ask if you were in a particular city at a specific time. That can help you figure out what it was."
Even the most informed customers can be misled by confusing transaction information. Nathan Casper was a marketing manager for a company that specialized in credit card security when he spotted a $1 charge from a gas station in New York on his statement. He lives in Las Vegas.
"All the red flags went up," he recalls. "I knew that to test stolen cards before trying larger purchases. I knew that gas stations sometimes charged $1 holds to credit cards before authorizing the full amount of purchase at the end of the day."
But here's what Casper didn't know: The credit-card-enabled air pump at his local service station, which he had used to top off his tires that morning, routed all of their transactions through a home office in New York.
It wasn't until his wife urged him to think back -- "Are you sure you didn't buy anything for a dollar today?" -- that he remembered the air pump.
"It's easy to panic, because the way they list things on the statement can be very confusing," Casper says. "Sometimes you just have to think back, do some research and you'll realize the sky is not falling, and that what you're worrying about was actually a legitimate purchase."See related: How to initiate a dispute or chargeback
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