When your credit card charge is denied

NEW YORK Thu Apr 26, 2012 11:58am EDT

MasterCard and VISA credit cards are seen in this illustrative photograph taken in Hong Kong December 8, 2010. REUTERS/Bobby Yip

MasterCard and VISA credit cards are seen in this illustrative photograph taken in Hong Kong December 8, 2010.

Credit: Reuters/Bobby Yip

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NEW YORK (Reuters) - Considering how often Marjorie Asturias's credit card charges have been denied recently, you'd think she was a notorious scammer, or an international art thief.

"We have plenty of credit on the card, and faithfully pay our balance in full each month," says Asturias, 40, a Dallas, Texas resident with a penchant for books, gardening and her three dogs. "But suddenly, we're getting a number of charges denied, sometimes while we're standing at the register."

"Before, this happened only a handful of times in the 10-plus years we've had the card," says Astorias, who is president of digital marketer, Blue Volcano Media.

Asturias isn't alone in feeling singled out by her bank for credit-card charge rejection. But it's not malicious; financial institutions are feeling the pressure of keeping up with armies of hackers who steal personal information, swipe card numbers and load those accounts with false charges.

Total global fraud losses from credit and debit cards amounted to $7.6 billion in 2010, up 10 percent over the previous year, according to trade publication The Nilson Report. Of that, 47 percent was in the United States.

Data on the precise number of charge denials isn't publicly available, as the banks consider it proprietary information.

And credit card companies like Visa say authorization decisions are made by the issuing bank, not them.

Industry experts confirm that consumers are dealing with an increasing volume of denied transactions, and having to prove they are who they say they are.

"Banks have seen an uptick in fraud the last couple of months, and they're trying to protect themselves," says Avivah Litan, a security analyst with technology research firm Gartner. "They put in blunt new rules to stop fraud, because their predictive models aren't keeping up. As a result they're creating a lot of false positives - and end up inconveniencing a lot of good customers."


Financial institutions say they have little choice but to clamp down, when security breaches are coming fast and furious.

Global Payments Inc., which processes charges for the likes of Visa, Inc. and MasterCard Inc., recently announced a hack that affected around 1.5 million customer accounts in North America.

In 2008, another processor, Heartland Payment Systems Inc., suffered a breach that hit 130 million accounts. And companies ranging from online shoe and apparel retailer Zappos to Sony Corp. to discount retailer TJX Companies Inc. have all been affected by security breaches.

In response, card issuers scramble to figure out which charges are legitimate. Unusually large purchases, or those from new locations or an unfamiliar computer, can raise red flags.

"We have to strike a balance between customer convenience and fraud prevention. And when there have been third-party security breaches, that clearly raises the bar for us," says Doug Johnson, a vice president of risk management policy at the American Bankers Association.

That's how the battle against fraud affects regular folks - like Marcia Noyes.

"I live in Colorado, my kids go to school in Oregon, and often, my husband uses the same account while traveling," says Noyes, 51, a marketing director for a healthcare technology company.

"The card company can't seem to differentiate when different cards are used in different states by different people," she says. "When my kids use their cards, it can cause real problems. It's frustrating."

Even Noyes' grocery and gas purchases have been turned down, as she appeared to be in three places at once. So, what's a frustrated consumer to do?

Here's what the experts advise.


Predictive models for fraud are based on identifying charges that don't fit previous patterns. So, if you're taking a vacation abroad to a new destination, alert bank representatives in advance that they should expect a flurry of charges abroad.

"Make sure you let them know where you're going to be, even if it's just outside your own state," says Erica Sandberg, editor at large for CreditCardGuide.com, a Bankrate company.

You may still get flagged, but an early heads-up may minimize that risk.


It's tricky to tell which charge will flag you as a potential fraudster. So if you're in the checkout line and your Visa is rejected, having alternative cards from competing issuers, like MasterCard or AmEx, will help.

"It makes perfect sense, just like having a spare tire," says Sandberg.


You don't want to be stuck with no means of payment while far from home. With a prepaid card, often sold at airports, you won't be caught dead broke while vacationing abroad.


The number of denied charges may have spiked recently, but as banks hone their predictive models, that number should drift back down again, says Gartner's Litan.

And when issuers eventually switch to chip-based cards like those used in Britain, instead of the magnetic-strip versions, the prevalence of credit-card fraud should decrease - along with the frequency of denied charges.

"I've seen spurts like this before after big security breaches," says Litan. "Things should get better. But in the meantime, it sure is annoying."

(Editing by Bernadette Baum)

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Comments (3)
Correct me if I’m mistaken, but isn’t this a simple matter of stepping aside with your purchases and (a) calling the number on the back of your card, (b) speaking to a bank representative, (c) asking the little girl to reactivate the card, then (d) trying again to run the charge through (perhaps while she waits on hold)? This is not rocket science.

Apr 26, 2012 7:38pm EDT  --  Report as abuse
Lord_Foxdrake wrote:

You are mistaken. Allow me to explain.

Recently, I made a purchase in Switzerland on my TD Bank issued debt card for about 25 Swiss franks. Because “TD Bank” ‘didn’t like the charge’ (and that’s a direct quote) they froze my account.

Now the charge was for access to a VPN network service I use so that when I use my laptop in public WIFI, it’s secure.

It wasn’t gay porn.
It wasn’t AL Queda material.
It wasn’t from Afghanistan.

But “they didn’t like it, so there it was.”

Now hours after they suspended it, I went food shopping.

I spent two hours in the store buying enough food to feed a family of four at a cost of about $300.

Then I go to pay.

Now there was more than enough money in my account. I have over-draft, and pay all my bills on time.

But to make matters worse this was a debt card – tied to my checking account, not just some dumb credit card – so I was frozen out of all of my money.

Well suffice to say when I couldn’t use my debt card to pay for my groceries because my card was declined. I freaked a bit. Moreover, I didn’t have $300 on me and couldn’t use an ATM – again – debt card.

So I had the girls in the store roll my carts into the milk freezer. Drove to my bank, withdrew the money and went back to the store to get my groceries.

I then called TD customer service to find out why my card was declined as the physical branch couldn’t do anything about a “debit card” and “one needs to deal with the 800-number.”

Another two hours later – after verifying several transactions to prove it was me – which is stupid because do you know, off the top of your head, the last five transactions you made, with whom and for exactly how much? To the penny? My guess is no; they released the hold on my card.

And who did TD Bank blame?

Oh me for making a purchase in Switzerland … and VISA; stating they do it for my protection.

Yea, they keep me from my money for my protection.

I guess it comes down to this – real fraud protection costs too much – you know more than nothing – so the EASY thing to do is DENY the TRANSACTION and LOCK the CARD.

Customer, FU!

Apr 26, 2012 11:55pm EDT  --  Report as abuse
Eric93 wrote:
The case of the ‘marketing director’ who is a poor consumer who doesn’;t know what to do is too much for me. Duhhhh. Has she ever thought to get separate accounts for her husband and her and the kids???? Then they are all independent. Jeez. With such a clear thinking and innovative marketing director one wonders what shape is her employers business in??

Apr 27, 2012 2:57am EDT  --  Report as abuse
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