How Credit Card Companies Detect Fraud

Find out how Credit Cards are able to detect fraud instantaneously

How Credit Card Companies Detect Fraud.

Credit card companies are tracking your every move; by using your credit card for every purchase, these companies can see what you bought, where the transaction was made, what time it occurred, and how much it cost. With this massive amount of data, they are able to look for any suspicious pattern. If a series of events seems off, they can close your credit card until they can contact you to confirm the purchases.

Examples of suspicous patterns

Credit card companies are able to train their computers into noticing any unusual activity.

  • A purchase is made thousands of miles away from your usual area (remember to call your credit card companies before traveling overseas for vacation!).
  • A transaction occurs in an area of high credit card fraud. Credit card companies can construct a heatmap of where fraud is most frequent. The area of transaction gets weighed into whether this is a fraud or not.
  • A large transaction occurs right after a smaller one. This is usually a thief checking to see that the card works before making a larger purchase.
  • Type of purchase with regard to gender, typical monthly charge.
  • Frequency of purchase compared to the norm.

Why do Credit Card Companies invest so much in catching fraud?

Nowadays, credit card companies offer you protection so that you aren't wrongfully charged if your credit card information is stolen and abused. If you ever see a suspicious charge on your statement that clearly wasn't from you, you can request to have it removed and the amount credited back. Thus, the main reason that credit card companies are so invested in detecting credit card fraud is to protect themselves of wrongful charges.


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