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Friday, December 28, 2018

Credit Card Fraud: Do C.C. Companies Really Care?

Yesterday morning, yours truly wakes up to a phone call from my credit card company - seems there were some potential fraudulent purchases made on my card the previous evening and they wanted to see if I really made those charges or no

After informing the person on the phone that I did not, basically I had to confirm some information on file, go over some potential fraud transactions, then my account was to be closed until a new card with new numbers would be sent to me..

I am positive this exact scenario has happened to many of you at some point and the process works out the same - you find out someone used your card, you let the card company know, you aren't charged and get a new card..  Done
But two questions remained from this situation which left me curious:

1)  Did the card company know who was responsible for the fraud?

2)  Did they genuinely care to find out and go after the criminal(s)?

The answer to #1 I never found out because the person on the phone didn't wish to tell me anything - I wasn't going to be charged and wasn't responsible for the transactions so that was the end of my involvement in the matter

The answer to #2 I ended up talking with people and then looking it up on the internet to confirm they were correct in their cynicism
Essentially it comes down to this:  If the credit card fraud comes to around $1,000 or less, they really do not care to take the time or commit the resources to perusing the matter

Unless the fraudster is a repeat offender or uses the stolen card number for large purchases, then he, she or they got away with theft without a worry

Fraud is something that credit card companies basically bake into the cake, meaning they assume every year they will take financial losses based on people stealing and using others' card so as long as the fiscal year total doesn't exceed lets say $75 to $90 million, they just shrug and write off the fraud.
Here are some scenarios based on a website I researched on this topic and what credit card companies will or will not bother to do:

Scenario 1: You lose your wallet, someone steals your credit card, test-charges it at a gas station, goes and buys some merchandise at Wal-Mart and it all addes up to less than $600.

Result: You call, they close your account, send you a new card, and toss that fraud into the “never going to get it back” pile. In some cases, they can charge it back to the merchant. In other cases, they can’t.

Either way, they won’t pull the video from Wal-Mart. And they won’t try to prosecute the perp, though if you file a police report, your local police department may try to catch him. Or may not.. The credit card issuer almost certainly will not make an attempt, however.
Scenario 2: Your card number is included in a large-scale compromise (not identity theft, but maybe a merchant is hacked and loses a bunch of credit card numbers). There may or may not be fraud charges.

Result: The bank usually catches this before you do. When they do, there’s almost no fraud to charge off (or very little, comparatively).

If it’s fraud from the merchant involved in the compromise, the bank will put it back on the merchant to eat the fraud. They close your account and issue a new card.

Based on the nature of the compromise, the bank may pursue legal action against the merchant or work with LEAs to find the responsible parties, but frequently these hackers vanish into the mist.
Scenario 3: Your scummy cousin steals his elderly grandmother’s credit cards, changes the pin number, pulls out huge cash advances and buys drugs (this scenario occurs more frequently than many realize)

Result: If the bank finds evidence that it was a family member committing the fraud (even in cases of identity theft), investigators will do their best to hold the original cardholder responsible..

Cash fraud on credit cards is frequently from a relative/friend of the cardholder. Banks will usually require a police report to even consider forgiving the fraud.

So if someone fraudulently uses a card, hope its not family or someone you know or you're on the hook
Scenario 4: Habitual perps:  People who continually steal cards from others, then while faking the victims' identities, request credit limit increases then basically go to down, charging up a storm

Result: Investigators will eventually set up a couple of attempted sting operations..  If they succeed, great.. If not, the credit company gives up and stops pursuit

Scenario 5: Full on identity theft by a ring/someone you don’t know.

Result: Investigators look for patterns in the ID theft to find any leads to follow. Again, they work with law enforcement agents and other banks to find any trends in an attempt to stop the ring.

Then, they try to sell you their identity protection insurance.
So the conclusion is that in most cases, it costs the bank more in money and manpower to go after the criminals than to just simply write off the fraud or charge it back to the merchant.

Only with large-scale compromises, familiar fraud (scummy cousin), and repeat offenders will the bank try to go after the perpetrator. Though in almost every case, the cardholder signs an affidavit, so at least there’s a record.

Now compare all this to a person who steals $5 from a cash register or walks out of a supermarket with a unpaid loaf of bread..

Think that will be ignored and written off?

Kind of a fucked up financial and criminal system we live in, yes?