BillGuard seeks out fraudulent credit card charges that slip by

Thu Nov 17, 2011 11:20am EST

Credit cards are pictured in a wallet in Washington, February 21, 2010. REUTERS/Stelios Varias

Credit cards are pictured in a wallet in Washington, February 21, 2010.

Credit: Reuters/Stelios Varias

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(Reuters) - If you're like a lot of credit card users, you don't scour your bills, you just pay them. But you could be paying recurring charges you never signed up for, have fraudulent charges on your bill or otherwise pay for more than you should -- like millions of Americans do each year to the tune of $8.6 billion. And now, yes, of course, there's an app for that -- in fact, a free service launched in a beta test earlier this year called BillGuard that will look at your bills for you to try to determine if you're being ripped off or are paying recurring charges you weren't aware of.

Web-based BillGuard.com logs into your credit card accounts with user names and passwords that you provide, and scans your bills looking for potential red flags. Recurring charges you already authorized, you can simply acknowledge. Problem ones you can dispute.

Jesse Hertzberg, a web publishing software executive from Brooklyn, New York says BillGuard caught recurring charges totaling $68 a month he and his wife weren't aware of, as well as fraudulent charges.

"I would not have noticed it without BillGuard," he says. He credits the service with saving them hundreds of dollars. " I was thrilled and started telling my friends about the service."

BillGuard co-founder Yaron Samid says the company is constantly scanning web chatter to try to find complaints about fraudulent charges on credit card bills. Then the company searches its users bills for those charges and flags them. The idea for the company was born in part from a report in 2009 that millions of credit card users were being billed 25 cents at a time by a fictitious company.

"Nobody has attempted to tackle what we're tackling," Samid says. "We are providing a service that we believe the banks should be providing for their customers." And in fact, he says he expects to have partnerships with several major banks in the next year.

While the system appears to work based on Reuters testing, there are some concerns. Susan Grant, director of consumer protection for the Consumer Federation of America, wonders whether there's really a need for this kind of service.

"Shouldn't people check their own bills rather than relying on a service that makes assumptions about what's usual or unusual, which may or may not be correct?" she asks. "It's not like ID theft, where information about you may be hidden from your sight in databases that you don't have access to."

And while Samid says BillGuard uses a third party that works with financial institutions for the log-in information and takes great steps to secure that information, giving up your passwords for any reason does not sit well with security experts.

"As a security person, I cannot recommend the sharing of login or password information with anyone. Especially not the login and password for each card that you own," says Phil Blank of Javelin Strategy & Research. "This model may carry significant potential danger.

Regardless, Mayer Reich, CEO of RankAbove, a search engine optimization company, who was involved in the initial testing of Billguard, says he thinks it's a great idea that's going to be a hit with people like him who don't look that closely at their bills.

"Within the first 2 weeks they caught several charges that shouldn't have been processed," he says. "The total was over $100 and I would have never caught these charges if not detected by the software. The reason I love the product is in the past I never really checked my credit card bill often and most likely missed these kinds of charges as they were small transactions."

Now the question is whether consumers like him will risk their personal information -- with the promise that it will be safe -- to take advantage of the automation and crowd-sourcing offered by BillGuard, or just read their bills more closely?

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The author is a Reuters contributor. The opinions expressed are his own.

(Editing by Jilian Mincer and Beth Gladstone)

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