Credit cards, security holds and customer notifications

20Jul10

A few days ago, we got a call from a vendor to say that our corporate credit card was declined for a purchase. We pay off the card every month, and there was plenty of available credit, so this was a rather puzzling turn of events. We called the card issuer, and they said that a security hold had been placed on the account. They couldn’t even explain why, nor did they make any attempt to notify us about the problem. The only way we found out was through a vendor who, of course, wanted the card to clear so they could get paid.

This whole process is idiotic. If there’s a problem with a customer’s card account, the credit card issuer should immediately contact the customer via phone or email. The customer should not have to hear about it through the vendor grapevine and then scramble to figure out what went wrong. In other words, the customer should never be the last to know.

From what I understand, some banks do a better job at security and fraud notifications than others. There really needs to be an industry-wide standard for how customers are notified when their cards are placed on hold for security or fraud reasons. As it stands today, banks take a seemingly random series of steps — or no steps at all — when they suspend a cardholder’s account. This approach is unfair and disrespectful to customers, and costs the banks revenue when subsequent transactions are declined.

It really blows my mind that such an important process is handled so poorly by so many credit card issuers. This means there’s an opportunity for one or more banks to step up and make customer communications the focus of their marketing and positioning. Just present a few scenarios where consumers couldn’t make an important purchase or were otherwise inconvenienced because of a security hold they knew nothing about. A significant number of people have been in that situation, and I bet a fair number of them would dump their current bank if another card issuer told the right story and made a credible promise to treat them right.



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