Bank worried ‘scammers’ may be paying off credit cards

Scammers are responsible for all manner of fraud and mischief, including the theft of people’s identities, cash and financial information.

As as far I know, however, no con artist has ever maliciously paid off someone’s credit card balance.

So I couldn’t help but be intrigued when a Capital One customer told me about his recent experience having his card frozen and undergoing a fraud investigation after he paid off the more than $14,000 outstanding on his plastic.

“I kept asking them if they thought some random person had paid off my account,” said Erik Castro, 48. “They said they just needed to know that the money was legitimate.” Even now, the frustration was clear in his voice. “The payment was from the same Bank of America account I use for all my payments,” the Granada Hills resident said. “Why wouldn’t it be legitimate?”

Before we go any further, let’s pause to acknowledge that fraud protection for credit cards is a very valuable service. Most cardholders likely are grateful any time a financial institution spots a questionable transaction and steps in to prevent losses.

Castro doesn’t disagree. He said Capital One flagged some dubious itunes purchases a few years ago and quickly alerted him that his card may have been hijacked. It had been. A new card was immediately issued.

On the other hand, Castro said Cap One overlooked someone using his plastic last year to purchase a high-end baby stroller. He had to report that fraudulent transaction himself, which once again resulted in a new card being issued.

According to the Federal Trade Commission, acts of fraud resulted in nearly $2 billion in losses last year.

Identity theft accounted for about 20% of all fraud reports. And of those, credit card fraud was the leading form of ID theft.

So it would be foolish for anyone to want card companies to be less vigilant in keeping scammers at bay.

That said, Capital One seems a bit overzealous in its efforts — even considering the company was itself a cybercrime victim last year after a hacker accessed the personal data of more than 100 million people and small businesses.

Castro told me he’s never missed a card payment but started carrying a hefty balance after plunking down thousands of dollars for season tickets to Las Vegas Raiders games.

Then the coronavirus hit, his work hours were reduced, and he and his wife decided they needed to tighten their belts by making smaller monthly card payments.

Before too long, Castro was carrying a debt load on his plastic of $14,300. That changed a few weeks ago after he refinanced his mortgage and used some home equity to pay off the balance.

The next day, Castro said, he received a call from Cap One saying a fraud investigation had been opened.

“They wanted me to upload copies of my bank statements to prove that I made the payment,” he recalled.

Castro balked at the request. He asked to speak with a supervisor and was told one would call him back. No one did, he said.

What did happen, though, is that when he tried to buy some stuff at a Ross store, the cashier told him his Capital One card had been rejected. “It was embarrassing,” Castro said.

He called Capital One and was informed his account had been frozen until he complied with the request for bank documents.

“I told them it was the same bank account I’ve been using for years for all my payments,” Castro said. “I said they were making me feel like a criminal.”

Nevertheless, he uploaded the bank statements. A week passed. His card remained frozen.

Castro called Cap One again. This time a rep had him wait on the line while she set up a conference call with Bank of America.

Bofa verified that, yes, the over $14,000 payment was indeed made from Castro’s checking account. Capital One in turn unfroze his credit card.

Castro isn’t bothered that his card issuer was looking out for his financial well-being. “That’s a good thing,” he said.