Commentary
Bad Vibes Gathering
- by The Riff , July 22, 2009
The Riff: "What was abnormal about it?"
Kyla: "It was an unusual situation. There actually were several factors."
The Riff: "Like what?"
Kyla: "It could be that you don't make a lot of online purchases."
The Riff: "That's not true. We buy online all the time."
Kyla: "It could be that it was a relatively large amount that was being asked for in the transaction."
The Riff: "It was $200. What do you consider a relatively large amount?"
Kyla: "$200."
The Riff: "Really?"
Kyla added that there were other factors that led the bank's security team to decline the transaction and to freeze our account, like the fact that we don't normally conduct business with that merchant. That's true, we only conducted business with the Vibes once before - when we purchased tickets last year for the annual summer festival.
But we suspect that something else is afoot - that banks are becoming ultra conservative in their lending policies, even when it comes to relatively small purchases made by accounts with a long, secure history of online behavior.
What's our point? It's that a new kind of friction may be manifesting in the online retail marketplace, and if it festers, it could take some of the steam out of e-commerce, one of the stronger components of our otherwise languishing economy. Okay, so we still went ahead and purchased the tickets via a second, hassle-free transaction using an American Express card, and the original commerce action was completed. But the experience diminished what has always been one of the chief benefits of buying online - convenience, and relative ease-of-use.
We don't know how common this experience is these days, but we suspect it is something we will see more, not less of. And that we are all going to be experiencing some pretty bad vibes.
i had the same thing happen with Citibank - unbeknownst to me they actually closed my account, and created a new account after i made an online purchase for around $200. When i went to make a payment i didn't see anything due on the new account and totally missed the old account window - so i missed a payment. They used this as an excuse to up my interest to 25.99%. After i spent about an hour on the phone and told them that it was all their doing, that i had never missed a payment and had an excellent record w them, i got back to normal. but it was 'bad vibes'.
Agreed. And you would have had this negative experience much sooner if your purchasing patterns took you more frequently into internet regions known for credit abuse, like online gaming, where American Express, among others, is known for capriciously refusing transactions of arbitrary size. I suspect the discriminant is simply some heuristic like: "most online credit fraud is perpetrated by younger people, and rock-concert tickets, online games and snowboarding equipment are valued by youth."
I suspect that parents buying Hannah Andersen togs for tots will be less troubled by these freezes than people like me (I do corporate and business eventwork around platforms like Second Life and World of Warcraft) and perhaps you. But you're definitely correct in projecting that - for at least some sectors of the online economy - this practice of heuristic-based transaction refusal adds a certain costly friction. Moreover (again, arguably for reasons of security) credit-card providers are not transparent about their criteria for refusing charges, nor do they admit to being able to flag individual accounts as having earlier substantiated the legitimacy of charges submitted by a particular vendor. Thus it is that every time I buy a nickel's worth of virtual currency in Second Life, despite having done so hundreds of times before, I can anticipate the real probability of having to have yet another conversation with my (by this time very good) friends at Amex.
On the other hand, given the shoddy security of many e-commerce providers (not to mention real-world credit-card acceptors - have you ever wondered about the security of credit-card chits in the average restaurant or supermarket?) it's hard not to sympathize with credit lenders' desire to manage risk. A somewhat more agile system, perhaps employing one-time-use PINs generated from a keyfob or similar token device, would come down like the proverbial hammer on the kind of attritive abuse providers fear in these cases.
I had a similar experience a few years ago. The Saturday after Thanksgiving, I did nearly all of my Christmas shopping online (Isn't this the second most popular shopping day of the year?). I found out a couple of weeks later, when nothing arrived and I checked into it, that ALL of my purchases were declined because this was an "unusual" purchase pattern. I had shopped at fairly mainstream stores such as Toys R Us, Macy's and Abercrombie. And most of my purchases were under $100.
The credit card companies may do what they like when they like. It cost me a lot of time and money because I had to find my presents all over again (some of which were now out-of-stock) and pay higher shipping charges because I was now late.
No amount of conversation with the company about how shopping before Christmas should not constitute "unusual" behavior won them over in terms of compensating me for the trouble.
Tough luck.
Curious to know why everyone is quick to blame the banks, but no one is addressing the poor customer service provided by a merchant that didnt bother to advise you that your card was declined. Given the amount of fraudulent online transactions that took place this FALL, I don't think there's a problem with any merchant or bank choosing to protect itself. When ever I've had an issue, a confirmation call to the merchant and/or the bank has solved the problem.