When
your credit card company stops a thief from charging fraudulent expenses to
your card, you're thrilled. But what happens when they mistake you for the
thief?

With
$6.89 billion in fraud losses in 2009, credit card companies eager to stem the tide are continually beefing up their anti-fraud measures, relying
on sophisticated computer software to flag suspicious transactions. Trouble is,
what looks like a red flag to a computer may just be you trying to make a
mundane purchase. Then, all of a sudden, your card's declined, leaving you
red-faced and frustrated.

So
what looks bad to your card company? Anything out of the ordinary. "The
credit card companies -- Visa, MasterCard, American Express, Discover -- all
have their own proprietary technologies that look for anomalies in your
spending habits," says Robert Siciliano, a McAfee consultant and identity theft
expert based in Boston. Siciliano suggests that each transaction is automatically
analyzed for up to 200 different data points, everything from where you live to
what you normally buy to how much you're spending, to determine the likelihood
that you're the one actually making a particular charge. If the analysis
doesn't add up, your card will be blocked and your next purchase declined.

What triggers a block
Card issuers won't go on the record about
specific red flags -- as Siciliano points out, "That'll only give the bad guys
an edge." But according to experts and hapless cardholders who have experienced
a block, these shopping habits may lead to hassles:

  • Shopping where
    you've never shopped before
    .
    "I've had calls from my card company saying, ‘We've detected
    unusual activity.' It wasn't unusual, but it was a different pharmacy than the one I normally went to,"
    says Denise Richardson, a certified identity theft risk management
    specialist and author of "Give Me
    Back My Credit!"
  • Making several
    purchases quickly
    .
    Janis Badarau, of Lavonia,
    Ga., sometimes hits three grocery stores in a row to find what she
    needs and take advantage of sales. But a few months ago, she was so speedy
    that by the time she swiped her card at the third store, it was declined.
    "I called the bank when I got home, and they told me that shopping
    at three supermarkets within an hour or so was considered 'unusual
    activity,'" Badarau says.
  • Charging something small, then
    something big
    .
    Criminals sometimes test the waters with a stolen card by charging a tiny
    amount -- say, a song on iTunes -- before moving on to a triple-digit purchase.
    That small-big pattern in your own buying habits may result in a declined
    card.
  • Shopping away
    from your home base
    .
    That's especially common when you're moving. "If
    my billing address is Massachusetts and I'm buying a washer and dryer in
    Idaho, that's an anomaly, because why would I buy a washer and dryer in
    Idaho if I live in Massachusetts?" says Siciliano.
  • Charging
    travel expenses
    .
    On the road, any purchase from gas to restaurant meals can trigger a
    block. While that's long been true for travelers abroad, it now happens domestically,
    too. "Once my travel to L.A. flagged it and I spent 20 minutes
    verifying transactions," says Traci Coulter, of New York City. When she
    asked what caused the card to be declined, she was told, "a taxi, a charge at the
    airport, in-air Wi-Fi and a rental car hold" -- all standard travel
    expenses.
  • Buying
    things in different geographic regions on the same day
    . During
    a cruise, Janet Gillis, of Tampa, Fla., used a card to get money from
    an ATM on the ship, then she later made a purchase on-shore in Belize. For
    the rest of the trip, her card was declined. "Apparently, the ATM on board
    the ship is registered to a Miami location, and several hours later, I was
    purchasing something in Belize. To them, it looked suspicious because the
    transactions happened so close together," says Gillis. Online purchases to
    merchants in different parts of the world can trigger the same flag.
  • Dealing with
    billing issues
    .
    When Siciliano wanted to make an addition to an online
    purchase, he contacted the company, but the second transaction they tried
    to process was declined. The card issuer "thought that the merchant was
    taking advantage of my card number."

How to handle a block
When
your card company suspects suspicious activity, sometimes you'll get an email
or a phone call asking you to verify a purchase. Other times your card is
simply declined, with no advance warning and no information why, and it's up to
you to call your issuer and sort out the problem. Follow these tips to minimize
the hassle (and humiliation) of a blocked card:

  • Carry back-up
    credit cards
    .
    You'll be able to offer another working card while you sort out the
    problems with the first.
  • Keep your card's contact info handy.
    "Have your credit card company's toll-free number as one of your phone
    numbers in your mobile," recommends Siciliano. "If a card is declined, you
    know who to call."
  • Tell your card
    company when you're traveling
    .
    Advance notice doesn't always keep your travel purchases off the
    "suspicious activities" list, but card companies recommend it. In the same
    vein, "Give your creditor your cell phone number,"
    says Richardson. "If they only have your home number on file, that can be
    a problem, too."
  • Use a prepaid card. When
    you travel, a preloaded card gives you the convenience of credit without
    the hassles. (You do lose the protection, however, so that convenience
    comes with a price.)
  • Get texts. According to Chase
    representative Gail Hurdis, customers can sign up to receive a text
    message within minutes of a flagged transaction and can indicate by text
    whether they recognize it. If they do, the account is updated and the
    transaction cleared instantly.
  • Provide a new
    address
    .
    When you move, quickly update your billing address so your card company
    recognizes your new home base.
  • Ask for
    compensation
    .
    When Linsey Knerl's card was erroneously declined, the store cashier
    refused to accept any other card, forcing Knerl to abandon a cart full of
    stuff. The Tekamah, Neb., woman wrote a letter to her issuer
    expressing her disappointment. "The credit card company actually gave me a
    rewards points bonus for my troubles -- enough to buy a plane ticket the next
    time I traveled!" she says.

Annoying as it can be to get blocked by mistake,
remind yourself that it's a sign that your credit card company's got your back.

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