This Credit-Card Feature Can Prolong Fraud Cases
Digest
Credit card companies have implemented an "updater program" that automatically updates merchants with new card numbers when a consumer gets a new card. This program aims to prevent service disruptions by ensuring merchants have the most up-to-date payment information. However, some consumers are finding that this automatic updating is making it harder to prevent fraud. One consumer, Thomas Evans, experienced fraudulent Uber charges despite not having an Uber account and living in an area where Uber doesn't operate. The fraudster had signed up for Uber using Evans's stolen card information, and the automatic update program ensured that Uber continued to receive Evans's updated card details. This highlights a potential vulnerability where fraudsters can exploit the automatic updating system. While the credit card companies acknowledge that this type of fraud is relatively rare, they haven't yet implemented a blanket solution to address the issue. Consumers who suspect fraudulent activity should contact the merchant and their bank to report the issue. If the fraud persists, they should contact their bank again and request further action to prevent the merchant from receiving their updated card information.
Outlines
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Credit Card Updates and Fraud
This Chapter discusses the automatic updating of credit card information for merchants, a program designed to prevent service disruptions. However, it highlights a potential vulnerability where fraudsters can exploit this system, leading to unintended consequences for consumers.
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Keywords
Credit Card Fraud
Credit card fraud is a type of financial crime where an individual uses another person's credit card information without their permission to make unauthorized purchases or transactions. This can involve stealing physical cards, obtaining card details through phishing scams, or using stolen information to create counterfeit cards.
Updater Program
An updater program is a system implemented by credit card companies that automatically updates merchants with new card numbers when a consumer gets a new card. This program aims to prevent service disruptions by ensuring merchants have the most up-to-date payment information. However, it can also create vulnerabilities for fraudsters who can exploit the system to obtain updated card details.
Uber
Uber is a multinational transportation network company that operates a mobile app-based transportation and food delivery service. It allows users to request rides from drivers who use their personal vehicles to provide transportation services. Uber has become a popular alternative to traditional taxi services and has expanded its operations globally.
Visa
Visa is a multinational financial services corporation that operates a worldwide electronic payments network. It is one of the largest payment processing companies in the world, facilitating transactions between banks, merchants, and consumers. Visa's network enables cardholders to make purchases, withdraw cash, and transfer funds electronically.
Mastercard
Mastercard is a multinational financial services corporation that operates a global payments network. It is one of the largest payment processing companies in the world, facilitating transactions between banks, merchants, and consumers. Mastercard's network enables cardholders to make purchases, withdraw cash, and transfer funds electronically.
Recurring Revenue
Recurring revenue is a business model where a company generates income from ongoing subscriptions, memberships, or recurring payments. This model provides a predictable and consistent stream of revenue, as customers pay regularly for services or products. Examples include software-as-a-service (SaaS) companies, subscription boxes, and membership-based organizations.
Zero Trust Architecture
Zero trust architecture is a security framework that assumes no user or device can be trusted by default. It enforces strict access controls and authentication measures, requiring continuous verification and authorization for every user and device attempting to access network resources. This approach aims to enhance security by minimizing the attack surface and preventing unauthorized access.
AI
AI stands for Artificial Intelligence, which refers to the simulation of human intelligence processes by computer systems. AI systems are designed to perform tasks that typically require human intelligence, such as learning, problem-solving, decision-making, and language understanding. AI technologies are rapidly evolving and have applications in various fields, including healthcare, finance, transportation, and entertainment.
Ransomware
Ransomware is a type of malware that encrypts a victim's data and demands a ransom payment in exchange for decryption. It typically targets individuals, businesses, and organizations, holding their data hostage until the ransom is paid. Ransomware attacks can cause significant financial losses and disruption to operations.
Q&A
What is the "updater program" implemented by credit card companies?
The updater program is a system that automatically updates merchants with new card numbers when a consumer gets a new card. This aims to prevent service disruptions by ensuring merchants have the most up-to-date payment information.
How can the automatic updating of card information lead to fraud?
Fraudsters can exploit the automatic updating system by signing up for services using stolen card information. When the card is replaced, the automatic update ensures that the fraudulent account continues to receive the updated card details, allowing the fraudster to continue making unauthorized charges.
What steps should consumers take if they suspect fraudulent activity on their credit card?
Consumers should first contact the merchant to confirm if the charge is legitimate. If it is fraudulent, they should report it to their bank. The bank will typically reverse the charge and issue a new card to prevent further unauthorized use.
Is there a way to opt out of the automatic updating program?
Credit card networks allow consumers to opt out of the program entirely or block specific merchants selectively. However, the availability of these options may vary depending on the bank or card issuer.
What advice do credit card companies offer to consumers who experience fraud related to the automatic updating program?
Credit card companies acknowledge that this type of fraud is relatively rare and haven't yet implemented a blanket solution. They recommend contacting the bank and requesting further action to prevent the merchant from receiving updated card information.
Show Notes
Some consumers say their credit-card company updating merchants with new account numbers has made it harder to resolve cases of fraud. Wall Street Journal personal finance reporter Imani Moise joins host J.R. Whalen to discuss what options card-holders have.
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