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Credit card false positive hits home

Karen Queen

Being protected from fraudsters who want to use your credit card is great — right up to the awkward moment when you try to use your card and learn it’s been blocked. Credit card networks call the situation a false positive, but I learned there’s nothing positive about it.

I allowed my daughter to use my credit card to spend $1,164 on a new laptop for college. She made the purchase online from home, using my credit card, with my mobile phone within 200 feet. The transaction went through.

But a few days later when I tried to use that card at the doctor’s office, that transaction was denied. I asked the receptionist to run the card again — surely this was a mistake. Nope. My card was blocked.Credit card false positive hits home

I was embarrassed. Did the receptionist think I was over my limit? Maybe trying to use a stolen card? I was grateful I had cash on hand to pay. What if I hadn’t? Would I be washing stethoscopes to pay off my debt?

Back home, I called the credit union that issued my card. “Your card set off a Falcon alert,” the nice customer service rep told me. “Then your card was blocked.”

I knew all about Falcon Fraud Manager Technology from writing this story: “Advances in fraud analytics promise to stop crooks, not you.” Falcon is the anti-fraud technology developed by FICO.

The customer service rep asked me if I made the computer purchase. Yes, that was a legitimate transaction, I told her. She indicated that the Falcon system, which does not yet use your mobile phone to track your location, flagged the purchase as suspicious.

That made sense to me because purchases of computers and other electronics are among the risk factors that issuers see as a signal that a transaction may be fraudulent. So why let it go through? She didn’t have an answer.

I had other questions. Why was I not notified of the suspicious activity or that my card had been blocked? Again, the nice rep didn’t have answers. I was not angry, but I was curious.

Mobile analytics could have helped
After a lot of back and forth with my credit union and with FICO, I found some answers.

Mobile phone analytics, which will eventually be included in Falcon, would have helped in my situation, says Scott Zoldi, FICO’s vice president of analytic science. The program would have noticed that my mobile phone was at home, in the same place where I make most online transactions.

“But if you were out and about with your phone while your daughter made the purchase, then that could make it more risky,” Zoldi warns. “The mobile model would know that your phone is generally at your house, [where]most card-not-present transactions are made.”

Issuer’s rules also in play

But my credit union was not relying solely on Falcon. Credit card issuers typically use the Falcon score in conjunction with their own rules, scores and strategies, Zoldi says. My credit union likely could have obtained mobile technology from its credit card network, but had not done so.

In my situation, the Falcon score could have been low (the lower the score, the less likely a transaction is fraudulent), but my credit union may have additional rules covering card-not-present transactions over $1,000, Zoldi notes.

How my credit union used Falcon made a difference, too, Zoldi says. My credit union probably was using Falcon in what’s called online mode, which means it couldn’t act quickly enough to block the suspicious computer purchase, he says. After the purchase, the credit union blocked my card to keep from taking on more loss, he adds.

“We generally recommend real-time mode, which would have caused the computer transaction to be blocked — if indeed the Falcon score was high and drove the block of the card,” Zoldi says.

If a transaction is automatically blocked, the credit card issuer usually sends a text message to the cardholder, who can respond via text and quickly resolve the issue, he says. “You can talk to your bank while making the purchase; they confirm it’s you and the transaction goes through,” Zoldi says.

In my case, the transaction went through, then my card was blocked. “Normal activity is then blocked regardless of what Falcon says,” Zoldi explains.

It appears the technology worked fine. The human factor? Not so well.

Communication breakdown
My credit union is supposed to get an email notification from Falcon when an alert or block is placed on an account, the vice president of marketing told me. But the credit union was not notified this time, he said. That communication breakdown led to my embarrassing moment with the receptionist.

Bottom line: Mobile technology would have helped by linking the purchase to my mobile phone’s location. But if people don’t follow through, then even the best technology is limited.

I’m grateful that antifraud technology exists. I understand that it protects all of us from fraudsters. But the price we pay for this protection is the potential for false positives that can stop legitimate transactions.

The lesson: Don’t rely too heavily on anti-fraud technology or any single credit card. A backup plan means that when fraud analytics block legitimate purchases, you won’t be embarrassed, washing stethoscopes — or dishes.

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