This Credit-Card Feature Can Prolong Fraud Cases
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Here's your money briefing for Thursday, July 11th. I'm J.R. Whelan for The Wall Street Journal. If you lose your credit card or it expires, or maybe you notice something suspicious on your bill, you might get a replacement card in the mail with a new account number. Some card companies go an extra step to make things easier for you.
Every single time you get a new card number, the credit card network will automatically update all the merchants that have your information on file to prevent that kind of service disruption.
But some consumers are finding out those updates are making it harder to fix cases of fraud. How? We'll get to the bottom of it with our personal finance reporter, Amani Moise, after the break.
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Many credit card companies have streamlined the legwork for consumers when they order a new card. But for some, it's resulted in a lot of headaches.
What is the episode about and why does account-number updating matter?
Wall Street Journal personal finance reporter Imani Moise joins me. Imani, what are reasons somebody might ask their credit card company to send them a new card?
So say you lose your wallet, you're probably going to want to request a new card because you don't want someone to pick it up off the street and all of a sudden have access to your card information. Sometimes you don't even have to lose your card or it doesn't have to be stolen, but the card company will send you a new card just because your existing one expired. So that typically happens every three to five years.
So when the card arrives with a new number on the account, what do consumers usually need to do?
So the first step is to activate your card and then you need to rack your brain to try to remember every single service provider or retailer where you had your information on file. So that could be like a utilities provider or something like a Netflix subscription, because if you don't log on to those accounts and update your card information, odds are you're probably going to get that email saying, hey, Your payment's been declined. If you don't update your card information soon, we're going to have to cut off your service. And nobody wants that. That's just a headache to deal with. But nowadays, it's become a lot easier, and that's because the credit card companies have enrolled more merchants in what's called an updater program.
And what that does is that every single time you get a new card number, whether that's because you lost your card or it expired, The credit card network, so a lot of times that's MasterCard or Visa, will automatically update all the merchants that have your information on file to prevent that kind of service disruption. I found some data while I was reporting this story out that says about 50% of all subscription churn, so that's basically the amount of people who unsubscribe from a service, happens involuntarily due to payment failures because the payment information is outdated. So it really helps the merchants keep their recurring revenue intact.
You spoke with several consumers who said that the automatic updating has actually caused problems with fraud.
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