When Fraud Detection Hinders Rather Than Helps

I’ve had a long relationship with Patelco Credit Union, they were the first financial services company I became a customer of when I first entered the work force and even though my needs have exceeded the services they offer I do rely on them for a credit card that I use almost exclusively. I like the idea of community banks and have tried to support them over the years.

A few months ago I started having problems with my credit card where transactions were being declined and only after calling the bank did I learn that a fraud block had been placed on my credit card. After having this happen a handful of times, with vendors that have repeat transactions in my history and therefore should not have triggered any alerts, I asked the customer service agent what was going on. I learned that Patelco had replaced their existing fraud detection service with a new vendor, almost precisely when I started having problems.

Here’s the thing about fraud detection on credit cards… it doesn’t protect you as a consumer, it protects the credit card issuer. Fraudulent transactions on anyone’s credit card can be disputed and reversed by the card holder, therefore fraud detection services are designed to protect the bank from excessive exposure as a result of disputes that are unrecoverable from merchants who are as much a victim of fraud as the cardholder.

After having experienced, if I recall correctly, the 8th incident this morning (weekend purchases seem to be the culprit) I have had enough. Patelco needs to work with their vendor to fix what are some obvious weaknesses in their system because I my patience is at it’s limit and my relationship with this institution will end if improvements are not made.

To add insult to injury, the most ironic aspect of this running saga is that I recently was the victim of real credit card fraud and it was me, not Patelco, that discovered it… so their track record is 8 false positives, zero legitimate alerts, and 4 missed actual fraud events. This is not a record they should be proud of.