Cyber crimes and identity theft in recent years have become more sophisticated to the point that cybercriminals have opened up online stores that offer up credit card and account information from unsuspecting victims. According to CreditCards.com, credit and debit card fraud is the number one financial fear that American consumers have.
Another issue to be concerned about recently appeared in a report compiled from internet security firm Pandalabs, which found a total of 50+ online trafficking sites that sell compromised financial information. With savvy technology that can potentially read and swipe your card's personal information even while stored in your wallet, your credit card company can detect suspicious activity is being generated on your credit card.
While these companies don't give specifics on how they go about detecting the fraud, instead they look for warning signs and spending habits. Here are a few ways your bank or credit card company can detect suspicious activity:
Shopping in less desirable neighbourhoods
If there's a shopping spree that takes place in neighbourhoods that are deemed fraud prone, it raises red flags from your credit card company. If there are purchases in large amounts, the bank will most likely put a freeze on the account.
Testing the card
Usually before the thief goes out and spends frivolously, they will test out the card to see if it works by purchasing an item for a small amount or filling up at the gas station. If the same small amount is charged consecutively, the bank may stop payment, as it is a possible fraudulent purchase. If you usually buy gas in the same area of your city but you fill up in another part of town, this can trigger an alert with the bank.
If your card or number is stolen and a purchase is made in Europe while another is simultaneously made in California but you live in New York, that is a definite alert that there is fraudulent activity going on. One thing to keep in mind is that even though you make an honest purchase, if there is suspicious activity taking place, your card will most likely be declined.
Unusual spending habits
Constant activity in a short period of time can raise a red flag to bank and credit card companies. The bank can see your purchases and knows your spending habits and if it's an amount out of the ordinary, you may get a call from your bank or credit card issuer questioning your purchase. If you're suddenly buying an expensive handbag that's worth $1,000, but your spending habits with your card is usually below $200, that can cause fraud detection. There may be a freeze put on the account if there are large amounts of purchases or cash withdrawn from ATMs.
It's important to always pay close attention to and keep track of all purchases made with your card. Checking your monthly statement isn't enough. Be vigilant about your purchases, and if you are concerned about your credit card company or bank issuing a freeze on your account (if you are, for example, going on vacation overseas), call them ahead of time and alert them of your situation.