7 Ways You Could Accidentally Set Off Your Own Fraud Alert

Discover which financial activities put banks on the alert.

With hacks at credit reporting agencies, corporate data breach scandals and a constant influx of new phishing scams, banks and other scams, credit card issuers are becoming increasingly vigilant about fraud — for good reason. Fraud is on the rise, and your first defense against victimization is a fraud alert, which your bank issues when it detects a suspicious transaction or worse. Although many alerts are false alarms, they can result in a frozen bank account or an embarrassing decline at the register. Find out when you might accidentally trigger your own fraud alert and how to protect you against credit card fraud.

7 Ways You Trigger Your Own Fraud Protection

It’s up to you to report identity theft, a compromised Social Security number, stolen cards or unauthorized purchases. But banks and credit card issuers also have a responsibility to prevent credit card fraud and report suspicious activity to you, even if it’s a false alarm that you triggered. By focusing on prevention, you can avoid the headache of trying to bounce back from credit card fraud.

To help prevent annoying false alarms, learn about the ways you might trigger your own fraud alert:

1. Making Purchases in a Strange Place

One of the surest ways to end up with a frozen bank account is to swipe your card when you’re out of town. A transaction from somewhere outside of your normal shopping area can be a red flag to your bank, especially if it’s outside of your state or country of residence.

Of course, it’s likely you’re simply traveling, but the fraud department could report a problem, and a freeze can be put in place nonetheless, especially if you’re traveling abroad and making purchases overseas. The solution: Make a quick phone call to your bank before you hit the road. Let them know where and when you’ll be traveling so you can avoid a frozen account when you need access most.

Read: How to Report Credit Card Fraud

2. Making Unusually Large Purchases

Banks use fraud detection systems to spot suspicious purchases that differ from a cardholder’s normal spending habits. Although vacation spending in an unusual place is one way to trigger a red flag, what you purchase is just as important as where. Unusually large purchases can trigger fraud alerts, so contact your bank if you plan to spend what you consider to be a lot of money at one time, such as for a home improvement renovation. Your credit card issuer is also aware of your income and occupation, so if you suddenly buy a luxury item you couldn’t normally afford, it might be a red flag.

3. Spending Big on a Brand-New Card

Heavy spending on a card you just opened can make it appear that someone opened an account in your name, according to Sarah Hollenbeck, a personal finance and credit card expert at Offers.com.

“Making unusual purchases on a card — especially a new one — can sometimes cause fraudulent alerts,” Hollenbeck said. “Eventually, anti-fraud algorithms will get to know you and your spending habits. But the key words here are ‘once the algorithm gets to know you.’ If you get a brand-new card in the mail, activate it and then immediately buy some plane tickets across the world or a rail pass for your trip to Europe, expect that purchase to get rejected — and expect to have to verify it with your bank.”

4. Failing to Sign Up for Text Alerts

Banks and credit unions offer their customers the option to receive text alerts. When the fraud department detects suspicious activity, customers receive text message notifications.

Customers have an opportunity to respond, verify some personal information, confirm that the purchase was legitimate and avoid a service interruption. For customers who don’t opt-in for these alerts, however, the bank or card issuer has no choice but to freeze the account.

Find Out: See If You Might Accidentally Be Committing Credit Card Fraud

5. Forgetting to Update Personal Information Changes

Your bank needs to know about changes. When you move or get a new phone number or email address, make sure to notify your lender or card issuer. A discrepancy between the information your bank has on file and the information associated with a purchase might trigger the bank’s fraud-alert system.

“The simplest of actions can trigger an alert, such as using a credit card at the gas pump and entering the wrong ZIP code,” said Megan Gorman, managing partner at Chequers Financial Management in San Francisco. “If that happens even just a few times, it gets attention from the credit card companies.”

6. Buying Luxury Items That Are Irresistible to Thieves

Some items are more closely associated with fraud than others, according to Sol Nasisi, co-founder and president of personal finance site BestCashCow. Small transactions here and there probably aren’t going to sound off any alarm bells — at least at first. But some purchases are especially likely to send up red flags.

According to CNBC, fraudsters are especially drawn to luxury items like diamond pendant necklaces, designer tote bags and backpacks, as well as electronics like Fitbits and expensive headphones. Digital products that can easily be converted to money, like gift cards, can also raise a flag. Consider contacting your bank when making these purchases.

7. Making a Small Purchase Followed by a Large Purchase

When thieves steal credit or debit cards, they often test their newfound buying power by making a small initial purchase. Then, they move on to their true target, which is often an expensive, high-end item.

Banks and credit card providers, therefore, are inherently suspicious when cardholders buy a pack of gum, for example, and then immediately buy a pricey computer. According to CNN, purchases under $5 quickly followed by a purchase of $100 or more can trigger an alert.

Up Next: Don’t Get Caught in These Check Scams

In the event that your card is declined while shopping or traveling, don’t panic. Just call your bank, confirm that the purchase was legitimate and ask them to remove the fraud alert.

  • Stephanie Barbaran

    It would be nice if banks provided better details about POS and other transactions in the “account activity history” because sometimes the descriptions don’t exactly match the retailer name or are processed in an order that doesn’t reflect the actual purchase order, which can make a paranoid person like me worry for a minute before I deduce what the transaction actually was. Totally agree about calling before going on vacation, but I wish such precautions weren’t necessary before doing a lot of shopping.