Recently my banking debit card was charged $34.84 by a company called Adipose RX for some dietary supplements. Because I have transaction alerts set for my online banking account, I was immediately notified of the unauthorized charge. Despite promptly contacting my bank’s representative and informing them of this problem, I was told that until the pending charges were processed there was nothing I could do. Thus a few days later I had to call them again to dispute the charge and begin the process of filing an official claim for the unauthorized charge.
While speaking with bank’s representative she told me that, in order to file the claim, they had to close my card and issue me a new one. I was very hesitant to do this since I use my card to pay several merchants automatically. Hence, once I close the card, I have to hunt down each individual merchant and re-register the new card. Facing the possibility of more unauthorized charges I reluctantly closed my debit card, visited my local bank to obtain a temporary card, and spent about two hours changing the form of payment for all my merchant services. I still have to file an affidavit of fraud that will be mailed to me and I was encouraged to contact the local police to file a fraud report despite the fact that the perpetrators of this fraud reside outside the United States.
Last year my social security number and other personal identification information was compromised when someone hacked into the university’s employee database. Since then we’ve been using LifeLock to make sure that no new lines of credit are opened in our names without our permission. Unfortunately, there is no such service to prevent someone from making unauthorized purchases with an already active credit/debit card. It’s quite surprising that in this day and age, besides closing a card and filing a fraud claim, there is nothing you can do to prevent the same thing from happening again.
While researching Adipose RX I came across some forum postings from other victims of this scam. A few had actually been in contact with Adipose RX employes and had received letters from them indicating that their information and/or their credit/debit card was obtained via an affiliate membership with major search engine marketing companies (Google, Yahoo, or Microsoft). Whether that was ever substantiated or not is unclear. It appears that the perpetrator is an affiliate of Adipose RX who is generating commissions via fraudulent purchases with Adipose RX refunding the fraud victims orders. Thus the affiliate is getting paid regardless of any canceled transactions or disputed charges and because they reside outside the U.S., there’s very little chance they will ever be brought to justice.
My story is not unique, there millions of unauthorized transactions are processed year with no way to prevent them. The only treatment, closing the debit/credit card, is not a preventative measure and it does nothing to deter these thieves from doing it again once they obtain my new card number. In my opinion, the perfect fraud prevention system for the card holder would be the ability to create filters that can be applied to the card itself. Thus when the first unauthorized charge is completed, the card holder could easily block that specific merchant to prevent any more fraudulent charges from occurring. These filters could be monitored by the banking institutions to quickly identify developing trends of fraudulent behavior as well as repeat offenders. Once they have that information, the banks could send out notifications or apply automatic filters that could block known perpetrators before they get chance to make another illegal purchase. Thus such a system would be very much akin to how the anti-spamming service Akismet operates.
Of course the prevention system I’ve described above is probably not in place now because I expect that the banks executives believe that giving consumers such veto power would result in too many false positive claims. On the contrary, if a false positive claim was issued and verified a fee could be assessed to keep abuse under control. Furthermore, such a preventative system for fraudulent charges would probably confer savings since it would drastically reduce the probability of repeat offenses by the same merchant. This system would probably assist in weeding out dirty members of affiliate marketing services too.
While such a system may never be implemented, it’s greatly needed and could save U.S. citizens and banks millions if not billions of dollars. I wonder if this presents an opportunity for a private company to develop such a system of financial protection? If someone offered me this service, I would sign up immediately. According to the representative in my bank’s fraud department, however, the current financial/banking system does not allow for such innovation and oversight. Hmm…wonder why that fails to surprise me?
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Akismet really is a key plugin for wordpress to keep all the spam out, they do a very good job, it stops most of the rubbish getting through onto my site.
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