Kids And Finances

Teens And Money: How Do Banks Detect Fraudulent Charges?

identity theft advice, detecting fraudulent charges, protecting against fraudulent charges

Teaching teenagers important personal finance lessons is sometimes as easy as waiting for situations to happen, and then discussing them. An attempted purchase, and a subsequent phone call the next day was a great example of teaching my son about how seriously banks take fraud prevention.

My son approached me late one evening to discuss making a significant purchase. He has been getting into video editing, specifically footage for online gaming blogs. He’s been using a free version of a specific software package, which limits some of the more advanced options and he wanted to purchase the full version. After discussion we agreed that he could make the purchase. The next morning, however, he said that for some reason the sale would not go through. The error message indicating the card was declined. We both verified he the funds in his account, so he sent an email to their technical support.

When I returned home that afternoon, our home phone had a voice mail from our bank. The voice mail was addressed to my son, requesting he call the bank to discuss recent purchase attempts. I called him down from his room and had him listen to the message, indicating the reason his purchase failed was because the bank’s system flagged it as potentially fraudulent.

“That’s a thing?” he asked.

“Yes, that’s a thing,” I answered, laughing.

“Yeah, they called me too, but I hung up on them thinking it was a scam,” he replied.

“You’d better call them back,” I instructed.

Banks will decline purchases on credit or debit cards if they think it may be a fraudulent purchase, or in other words if they think your card has been compromised. There are several reasons why a financial institution might detect a purchase as fraudulent and they all have to do with analysis of how you normally use your card:

  • Location : If a charge is made at a retailer on the other side of the country from where you live, it may appear as if your account has been compromised. It could also mean you are simply traveling. Many times you can prevent this type of failed purchase by telling your bank when and where you are traveling.
  • Large Purchase : If your card is used in a larger than usual transaction, your bank may want to speak with you before letting it go through. I believe this is the one that triggered in my son’s case.
  • Amount of Purchases : If a large number of purchases are made in a very short period of time, your bank may question what is going on.

In summary, banks try to analyze your spending patterns, and straying from them may trigger a fraud alert. Sometimes it may a valid purchase, in others the bank may have saved you from a financial headache.

How about you, Clever Friends, have you ever had a purchase declined because your bank thought it detected fraud?

Also, feel free to check some of my favorite articles:

5 Key Things to Be Sure You Get Right on Your Loan Application
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Meal Delivery Service: Blue Apron Review
Which is Cheaper: Keg or Canned Beer?
Save Money on Water if You have a Pool

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Disease Called Debt

About the author

Brock Kernin


  • Oh my goodness, when I worked for a cruise line, my card would stop working all the time, even though I called to warn them I was traveling. Apparently making purchases in a different country every day for months on end really messes with their fraud system.

    • I’ve had that happen too. It’s frustrating when you explicitly tell them you’re traveling, and even where to, and purchase still kick off the fraud detection. I’m happy they have systems in place, but obviously improvements are possible.

  • My godmother buys me Dutch sprinkles for hagelslag (a Dutch treat of butter on white bread topped with chocolate sprinkles.) She ordered them online from one company she hadn’t used before and the credit card company called her because they thought “Dutch Sweet Treats” sounded like pornography.

    Even though I monitor my accounts every day, my bank has called me a couple times before I have even seen the charge. Every time they’ve called it’s been fraudulent, so I have been very thankful!

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