Do high-tech fraud alerts really help consumers?

do high tech alerts on credit cards work?Having your credit card number stolen is always a nerve-wracking experience, even if you're not saddled with a bill for, say, a shipment of computers to Albania after the issuer straightens everything out. Increasingly, banks that issue cards are looking for ways to keep you more in the loop about suspected fraudulent activity. While this might sound helpful, it's not universally a positive development and could leave you with more agita than before.

In theory, you want your bank to catch a fraudster before he or she successfully goes on a shopping spree with your number. But here's the rub: You probably don't want to be the one responsible for stopping them, and some of these new programs seem to do just that. According to this article, many of the nation's big banks now have programs for which customers can sign up to receive alerts via email, text message or some other method. What triggers these alerts is a "suspicious" transaction -- say, a purchase made without the card or one that's conducted overseas.

Unfortunately, if you don't happen to be checking your email or have your mobile phone with you when that message gets transmitted, the bank could freeze your account if you don't confirm that a suspicious-on-paper purchase is actually A-OK. Plus, if you're receiving these alerts via text message, you could burn through your monthly allotment of texts pretty quickly.

While banks say these tools are meant to empower customers, they could also help save the banks big bucks by lowering the amount they must charge off if a stolen credit card is used for a buying binge. For customers, there's not much incentive to participate, since their responsibility in the case of fraud is capped by law at $50 and many institutions will waive that.

What's more, one consumer advocate says, including customers in the loop means banks can transfer some of the fraud-monitoring process to you. "It's very clear banks are trying to get consumers to do their work," says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. "They're asking us to be their early warning systems." Furthermore, Mierzwinski expresses concern that issuers' reliance on email and text messaging could inadvertently divide customers into have- and have-not classes.

So how can you ease your mind when it comes to credit card fraud without being bombarded with alerts that might only raise your blood pressure? Mierzwinski suggests checking your statements regularly and being proactive and advising your bank in advance if you're planning a large or uncharacteristic purchase or a trip overseas.
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