Ruining Trust by Taxing Mistrust: the False Negatives Scam
I’ve had Mastercard problems for a few years now—on overseas trips they frequently reject transactions. I would call to reinstate. They would say they’d fixed the problem. They hadn’t.
6 months ago they said getting a business card would help. I did. It didn’t.
I’ll be brief; this is not meant to be a bitch session, but an exploration.
October 23, Netherlands: MC rejects a $15 charge for hotel internet access.
October 24, 8AM, I call: “it won’t happen again, Mr. Green.”
October 24, 10AM: I try to change an airline ticket; card rejected. I call: “well, there is a lot of fraud outside the US boundaries, Mr. Green." (Oh, the xenophobia). "It won’t happen again, Mr. Green.”
October 25, Kuala Lumpur: Buying ticket to Singapore; card rejected. I call: “It won’t happen again, Mr. Green.”
October 25, Singapore: checking into hotel. Card rejected. I call: “It won’t happen again, Mr. Green.”
An hour later, rejected again. Ditto a day later.
I finally wise up and insist on talking to a manager. Unbelievably, what I hear is this:
“Yes, I can see you’ve had this problem with unnecessary rejections for over a year now. And yes, we’ve been giving you the highest clearance each time, but that only lasts a day. The automatic limit rejection triggers kick back in the next day. But I can put in a request to the review committee to get you permanently approved at a higher level, even outside the national boundaries.”
This is a business card? And now you tell me I have to call mommy every time I want to fly or stay in a hotel? But never mind.
The issue is—why is this happening?
It is not a unique event. It is an example of a broader phenomenon, and it’s not a good one.
In medicine, we have to weigh the value of a false positive vs a false negative. What’s worse? To be told you have breast cancer when you don’t, or to be told you don’t have it, and find out later you did.
The medical industry in the US has responded resoundingly: we’ll take a ton of false positives so as not to incur a single false negative. And not just so we won’t get sued. It’s also because the patient pays the price of false negatives—economically and emotionally. It costs nothing to lay it all off on the consumer. The consumer is the insurer of first resort.
We all pay the price. We pay it in tons of unnecessary medical tests, because doctors are paranoid about being sued.
We have taken a social decision—how much to invest in health care for the ill—and subjected it to good old capitalist economics and to market-economy politics. When political correctness meets social policy, the businesses involved—medicine, insurance, credit cards—will massively opt for self-protection at the cost to—you guessed it, the consumer.
You are the one who pays for unnecessary medical tests. You are the one who pays for screening everyone at airports. You are the one who pays for statistically absurd radon protection when you buy a house.
And you (and I) are the ones who pay so that Mastercard doesn’t have to incur any losses. Because in fact, legally, they, not me, are liable for the bulk of fraudulent purchases. But we, not they, get to shoulder most of the costs. Fraud costs up? Just flag every transaction that’s online and outside the good ol’ USA, and lay it off on the customer.
Give the poor customer service reps training in empathy (which means tell them to say “I apologize” for things they had no part in). Retract your retraction the following day.
Oh yes—and tell the consumer it is all being done in their best interest. After all, you wouldn’t want someone to steal your credit card and use it for fraudulent purposes, would you?
Actually, right about now I would.
Ability to travel freely around the world with a credit card? Priceless. For everything else, there’s Mastercard.
No solutions on this one.
Just "OUCH!"
When I traveled to Costa Rica, I called the credit card companies that I took with me on the trip and told them the dates I would be there and to expect charges. They noted it and I had no issues with my (puny) purchases.
There is a balance to protection, of course, but given a choice, the company will over protect the company first, shareholders second, and customers last.
That might be very cynical, but look at how automated systems are designed and that’s that.
Hey Charles,
Very nice post. I think a lot of people will relate to the specifics and I love how you’ve bought out mastercard’s generic conflict. and then general lesson.
I’m not sure how things work in the US because I live in the UK (via Ireland and originally New Zealand) but are you sure it is Mastercards fault? I worked on the IT side of credit cards for a few years and it sounds to me like it is your banks fault – Mastercard provides the brand and the infrastructure, but the bank is responsible for accepting/declining an international transaction.
I was on holiday recently in Ireland recently and someone from my bank’s fraud department called me on my mobile to check that it was me making the unusual international transactions. Once I told them it was me making them, they were happy. I never sufferred a single decline. Unlike your bank they went just a little bit out of their way to keep both sides happy.
Thanks,
Clarke
Clarke, I’m sure you’re right; it’s JPMorgan Chase bank I should be peeved at, if indeed it’s the banks who set the gating criteria.
As Scott points out, these criteria are enshrined in automatic default programming–the question is how much they let people override them. My experience is, not much.
A few years ago, I was sending out copies of my {just published) book Trust-based Selling. While in Australia, I would send out 5-10 at night from Amazon. And the next day, without fail, JPMorgan Chase / Mastercard would cancel them. I’d get the cancellations the next evening, phone them up, go through their absurdly detailed levels of security, explain the situation and tell them it would be going on for several more days, would be assured "It won’t happen again, Mr. Green," and then of course it would.
The programmers, it would seem, just cannot resist invalidating the combination of outside the US, internet-generated, and–apparently the kiss of death–multiple charges for the same amount. As might show up when you’re trying to send out multiple copies of a book.
Another time they actually cancelled my card. They called me to say my card number had been stolen and used by a company called BEY National in the UK. I said the only transaction I had made was a cash machine withdrawal in Amsterdam airport, where I had arrived that morning. They said someone must have peeked over my shoulder and stolen the number, since they’d had several charges to this company in recent weeks.
I reluctantly agreed that maybe this time, they really had uncovered a fraud, and the right thing to do was cancel the card. For anyone with a ton of online payments like me, that means an awful lot of time to be spent.
An hour later, it dawned on me the stupidity they had committed on me. The ATM machine in Schiphol Airport was run by Abbey National, a UK bank. Drop the first two letters, and there’s your scammer–another bank.
I called with relief to tell them, and convinced them after 5 minutes they had jumped the gun and were in the wrong. However, they said, there is absolutely no recovery from a false negative. No one, they say, can reverse a cancellation. It’s part of the "protection" they offer me. And for this I should be grateful, they suggested.
A fatal error, and a stupid one at that, initiated by them, is irreversible–and I should be grateful? I think not.
I want Clarke’s bank!
I have the opposite issue with them…every time, it seems like I travel overseas they call my US number and want confirmation…once they hounded my wife for a $ 2 call I made from a Charles De Gaulle public phone…they would not accept her statement I was overseas because she is not primary card holder…and ignored my emails I was me…and turned off the card
Amex is much more global that way…
Charlie, I just read an interesting article on using predictive modeling to optimize customer relationships.
It sounds like, if the bank that issued your MasterCard were using more sophisticated predictive modeling in their fraud detection, you might be a much happier customer.
On a more pragmatic note, my husband is adamant about avoiding credit card troubles after years of doing cross-country trips on a motorbike (where getting your card frozen because you’re standing in the rain trying to buy gas for your bike hundreds of miles from home is a really big pain).
When we plan a trip, I call the our credit card account, let them know where we’ll be, and how to reach us if there are concerns. And our travel goes quite smoothly.
Do I really want to "report in" to my bank where I’m travelling? Not particularly.
However, I also don’t want to go through the hassles of identity theft, stolen cards, etc.
For the moment, until fraud prevention improves, I’m happy to make a quick phone call and save us from headaches on the road.
Cory Doctorow (of BoingBoing) has an interesting article on similar lines about Internet Immune Systems.
I’ve been reading a growing number of stories lately, in contradiction to my earlier advice, about travelers who find out the hard way that notifying your bank that you’ll be traveling may not be enough to stop the bank from freezing your bank card or credit card (so I wanted to set the record straight).
I also wanted to share this particularly funny story which actually made me laugh out loud, about a poor American trying to save his English vacation from Bank of America. (If you have ever watched Benny Hill, it is 10 times funnier.)
The article is a testament to the power of (well-written) comedy!
As for practical travel advice, redundant systems are generally your friend: more than one card with more than one bank, plus some cash, plus some traveller’s cheques, depending on the length of your trip.
How did you fare with your bank on your recent Asia travels, Charlie? And after your experience last fall, did you do anything differently?
Last Asia trip was uneventful, at least in terms of credit cards. Amex did the heavy lifting this time, and with no apparent trouble. But I do think multiply redundant cards may be the way to go, rather than putting your faith in any one.