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I have a Mastercard credit card issued by a U.S.-based financial institution. Several billing cycles ago the card information was compromised and several hundred transactions were initiated. The card issuer's fraud detection was able to flag all these fraudulent charges and either cancel payments or issue chargebacks. A new card was issued which I activated. However, the next billing cycle, more fraudulent charges were detected, canceled, and new cards issued. This has occurred for four billing cycles now, and four new cards issued.

The explanation I have received from the card issuer is that credit card networks like Mastercard and Visa have agreements with vendors that allow them to forward subscription charges to new credit cards when the card on file has expired. Presumably this is a benefit to customers who don't want their subscription services interrupted when their credit cards expire. The current method for dealing with these fraudulent subscription charges is to call up the credit card issuer and block these vendors one-by-one. This is time-consuming and frustrating, and a method for handling them all at once is preferred.

My question is:

Did I receive an accurate explanation for how subscription charges are forwarded on the credit card network? If this differs by network, please specify.

Secondly, is there a way to opt-out of this service? Does the card issuer have control over if subscription services are forwarded or does the credit network have exclusive control?

Peter Mortensen
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cms
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    Normally, this forwarding only applies for recurring charges that started before the first fraud. Like your Netflix subscription etc., which you would want to continue. This seems strange. You can always close the card and get a different new one... – Aganju Jun 27 '22 at 16:56
  • I feel your pain - same situation happened to me (although to a lesser extent), but I "only" had to go thru 2 card re-issue cycles before the fraudulent billing was stopped. Good luck ... – brhans Jun 28 '22 at 12:04
  • Why are you Asking that here, instead of Asking your service providers? – Robbie Goodwin Jun 29 '22 at 21:41
  • FYI most banks let you transfer your credit limit from one card to another. I’d just move the limit and close the first card if the bank is too incompetent to stop reoccurring payments. – Navin Jul 15 '22 at 05:30

3 Answers3

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The explanation is accurate, but not applicable to you. Note the "when the card on file has expired" part. You card hasn't expired, it's been canceled due to fraud. So your issuer, who's in fact doing the forwarding and has complete control, should have prevented this from happening. After all, the whole point of changing the card number was to prevent those who have the old card information from using it.

Mastercard/Visa, as the network owners, set the rules. They don't control your personal account.

littleadv
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    I've had recurring charges carry over across a card replacement. I think it's at their discretion to carry over anything that they think was pre-existing and therefore not fraudulent, for the customer's convenience. They just messed up in this case. – hobbs Jun 28 '22 at 15:22
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    The fraud could be happening right there at credit card company? Anecdotal: when i got my first creditcard in the Netherlands, the card 'disappeared' between the issuer and me, and money was withdrawn. When i called they told me to go to the police and that this had happened several times in that month. I got the money back from the issuer. – Ivana Jun 30 '22 at 10:11
  • @Ivana yes, this is entirely possible, however I find it unlikely that someone within the credit card company hates the OP specifically so much so that they're tracking their cards. Usually internal fraud results in a one-time leak of random cards (database leak) or continuous leak of newly approved cards (someone in the approval/risk management team stealing data). Fraud re-issuance is usually automatic and doesn't go through any manual intervention, and given that the initial fraud hadn't started when the card was first issued, I don't think it's an inside job. – littleadv Jun 30 '22 at 17:21
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This is probably pretty simple.

  1. Contact your card issuer, tell them about the problem, and say cancelling the card didn't work. Tell them that unless they prevent any charges from the previous cards from being forwarded you will change card issuer.
  2. Wait a month. If any charges are forwarded, cancel the card completely.
  3. Apply for a new card from a completely different issuer.
DJClayworth
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    While this definitely solves the problem, I wouldn't call "Apply for a new card from a completely different issuer" a simple solution. It requires a new credit application, a new hard pull, a new (and recent) account in the credit report, and provides no guarantees as to what the new credit limit is going to be. Additionally, different cards may have different benefits. – littleadv Jun 27 '22 at 18:23
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    It's a solution. It's simple. It isn't ideal for all use cases. So? – davidbak Jun 28 '22 at 05:00
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    Small thought, could there by any chance that there was no 'forwarding' going on, and instead there is some data leak on the system of the OP (e.g. spyware) and the charges instead are each time 'new'? – David Mulder Jun 28 '22 at 07:34
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    Bad services should not be awarded money and the OP clearly gets a bad service. Even if they themselves compromise card after card, the issuer should be able to help. – fraxinus Jun 28 '22 at 08:35
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    @littleadv: I know that the question is tagged with united-states, but the answer is a good one outside of the US. We do not have any of the hoops, you just apply online at a bank, they send you the card and you are done. No credit score or similar things exiust here so getting a new card is super simple. – WoJ Jun 28 '22 at 09:55
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    @WoJ Credit scores definitely “exist” in many other places, but they are rarely that formalised or important. All countries I have lived in (Austria, Switzerland, Sweden) had some way to track debt and credit risk, but I have never felt the need to game this score anywhere close to what seems usual in the US. – xLeitix Jun 28 '22 at 12:10
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    @xLeitix: in France we do not have that. Each bank calculates your credit score based on its own algorithm but it takes into account your revenues, past present and expected. There is no centralized place for such information they can rely on. In particular, there is nothing you can do to "build the score". Of course there are ways to build confidence (good salary, your saving profile, the kind of job you have) but this si more qualitive than quantitative – WoJ Jun 28 '22 at 12:35
  • @WoJ No, "building the score" is not really a thing outside the US in my experience. In all places I worked in your "score" starts essentially at max, and you can only go down by not paying your bills or having outstanding loans that are large in comparison to your income. – xLeitix Jun 28 '22 at 14:02
  • @xLeitix "building the score" is something that was invented to convince people to take more debt. And you don't "start at max", a person with no history will be near a median score. – Caleth Jun 28 '22 at 15:00
  • As someone who moved to a new country I can tell you that the "score" is not the main thing. When you start (meaning literally the first few months) the lack of a credit record makes it not that easy to get credit. But having a job and a reference from my employer got me a bank account, and soon after that a low-limit credit card. From there after a short while it was easy to get more credit cards and after a couple of years a mortgage. At no point did I have to "build my score" and I have never once looked up what my score is. – DJClayworth Jun 28 '22 at 15:39
  • @littleadv credit ratings are (sometimes) a scam. They are engineered to make people behave like the credit companies want, not in the way that better suits the user's interests. – Mindwin Remember Monica Jun 28 '22 at 19:53
  • @Mindwin it is what it is, but in the US it may be a significant consideration for many folks. Applying for new credit when not needed may interfere with applying for new credit when it is very much needed. I've had situations myself when I needed to justify random credit pulls that happened in a middle of a credit application elsewhere, and that's without any new credit obtained. Underwriters hate that. You can criticize the system, and that's fine, but you can't ignore it. – littleadv Jun 28 '22 at 19:59
  • The explanation you were given is incorrect. Nothing is forwarded or changed. This isn't really a special service. Your credit card authorizes people to charge your account. If your credit card expires, is canceled, or otherwise is replaced, then the old credit card can no longer be used to create new authorizations. But replacing or canceling a credit card has no effect on existing authorizations to charge the account. Those authorizations remain in place precisely as they were unless they are canceled. – David Schwartz Jun 29 '22 at 18:13
  • @DavidSchwartz Did you mean to post that as answer? – DJClayworth Jun 29 '22 at 21:34
  • @DJClayworth I don't think it really answers the question, for example, it doesn't include any suggestion about what to do about it. – David Schwartz Jun 29 '22 at 23:42
  • @DavidSchwartz no, that's not correct. The account in question is identified by the credit card number, which is exactly the reason to change the credit card number in case of fraud. Similarly with a checking account: if you change your checking account number, a new ACH transaction with the old number will bounce, it will not magically follow you (unless the bank specifically wants it to). – littleadv Jun 30 '22 at 04:18
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    @DavidMulder unfortunately no. The new cards have never been used period and remain in my safe possession. Furthermore all the additional charges are from subscription services, e.g. Spotify, Microsoft Online Store, etc. – cms Jun 30 '22 at 16:54
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    @littleadv Plus, one component that factors into your credit score is how long your accounts have been open. If the account in question is by far your oldest account, it's probably worth the hassle to get it resolved vs. moving to a new provider and resetting that timer. – bta Jun 30 '22 at 22:07
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    @littleadv The account can be identified by the credit card number, but that doesn't change the fact that authorizations are authorizations to the account and the same account can later be identified by a different credit card number. In fact, it's quite common for more than one credit card number to identify the same account, for example, when two people have credit cards that charge to the same account. Either can authorize charges to the account and the authorization stands unless revoked or the account is closed. – David Schwartz Jul 01 '22 at 19:11
  • @DavidSchwartz no, the external merchant knows nothing of an "account" other than the credit card, and they are only authorized to charge the credit card. Merchant cannot charge a credit card the consumer hasn't explicitly authorized them to. You're mistaken. – littleadv Jul 01 '22 at 19:54
  • @littleadv - why did you ask the question if you're sure you already know the answer? @ DavidSchwartz is correct: existing authorized automatic deductions get processed by the bank which knows all of your current and former CC numbers. They time out after awhile: when I got a new Visa card from Chase after fraudulent use it took (IIRC) 18 months and then my subscriptions had to get updated (I had to do it with the original vendors). Again, IIRC, this included cases where the subscription auto-renewed annually - that was allowed. – davidbak Jul 03 '22 at 23:42
  • @davidbak I didn't ask the question. DavidSchwartz is not correct. Yes, the bank knows all of your accounts. No, the merchant didn't get authorization to access any of them just because you flashed a credit card at the store. As I said in my answer to the OP and my comment to David - whether or not the bank does it is up to the bank, not the merchant. – littleadv Jul 04 '22 at 04:48
  • Could we stop this? We have chat for discussions like this. – DJClayworth Jul 04 '22 at 12:51
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It actually doesn't matter what you do in regards to getting a new card from a different issuer as major vendors pay these credit card companies to forward new card info for their supposed pre-authorized payments. It's credit card companies dirty little secret. I've had Microsoft still charging whatever credit card they can find for me for a subscriptions service for 365 that never worked and that I tried to cancel numerous time and finally, after a 3 hour phone call that I eventually got through to during which I was assured it was removed and cancelled they are at it again on a completely new credit card and charged me twice within 2 days causing me to wait on hold at the credit card company to put in yet another complaint for unauthorized transaction. Absolutely terrible that these credit card companies let these large vendors like Microsoft do this.

Keith Bell
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