This Credit Card 'Security' Feature Lets Thieves Keep Stealing After You Cancel

Credit card issuers have added convenient features that could give hackers access to your data for years.

If you think getting a new credit card from the same issuer will stop hackers from using your card, think again. More than a decade ago, most banks and credit card issuers introduced an automatic update feature that will give your new credit card information to any merchant with your card information saved.

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Card issuers claim it’s more convenient for customers. It’s also more convenient for fraudsters who have your card numbers. Once they get their hands on your number, your bank will conveniently provide a new one when you change it. 

Customers report extra charges from familiar merchants: $70 from Hulu, $9.99 monthly from Xbox, or Uber charges when they haven’t used the service. Since the fraudulent charges are mixed with regular charges, they’re also easy to miss. 

The classic example of fraudulent credit card charges involves small regular charges: $2.99 at one time and $3.50 at another. Most consumers overlook them, but it can be a sign of a bigger problem exacerbated by these updates. Think it can’t happen to you? It happens daily to people like you (and maybe you too).  

One customer reported a frustrating issue with his Apple card: after a $70 fraudulent Hulu charge, he called Apple and had the charge reversed. An Apple Card representative told him the only way to prevent recurring unauthorized Hulu charges was to block the company from charging his account. In other words, he could no longer use his card to pay for his Hulu account. 

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The problem isn’t isolated to Apple. Another customer asked JPMorgan Chase about a recurring fraudulent $9.99 Xbox charge, requesting that his new account number not be updated with Xbox. But within minutes of changing the account number, he got another fraudulent Xbox charge.

A third customer even asked Bank of America to send him a new credit card every few months for years to prevent fraudulent Uber charges. But the automatic updates meant that the fraud continued.

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The problem with automatic updates has grown as people store their card information on more sites and apps. The data backs up the increase in credit card spending, with the four biggest U.S. banks reporting that credit card spending rose in 2023 to $846 billion, up $34 billion from 2022. Think of how often you use one-click checkouts for everything from Amazon or Uber to restaurant reservations and doctors' appointments. 

There is no credit card processor or bank exempt from this issue. Credit card networks such as American Express, Mastercard, and Visa automatically enroll cardholders in updater programs, which they claim customers prefer. Banks say fraud from stored card information that’s updated is rare compared to other forms of fraud, but if you’re on the receiving end, it can be a huge headache.

The biggest problem is that there is no convenient solution. If you find fraudulent charges, your only recourse is to dispute the charge and block that company from charging your credit card. 

But if it’s a company you use regularly, that’s not a great solution for most people. If you have multiple credit cards, you can switch cards with that company — as long as your information isn’t compromised again. Welcome to the digital age: with greater convenience, in this case, comes greater risk. 

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