Why your bank card could be cancelled if you splash out on the kids

... or if you’re visiting family in Liverpool, London, Manchester or Birmingham

BANKS are blocking customers’ debit cards if they go shopping in rough parts of town or buy expensive gadgets out of the blue.

Most High Street names are using complex computer programmes to track where you shop, your hobbies and how much you spend. When your card is used suddenly in a way that seems out of character, it could indicate that a criminal has stolen your card or identity.

That sends a red flag to the bank’s fraud team, who will cancel your card immediately or phone you to make sure you’re OK.

But some banks’ alarms are so sensitive they can be set off by something as innocuous as buying an iPad or spending money in a town or shop that is listed by the bank as a fraud hotspot.

That means customers are being blocked when they’re visiting relatives and out shopping for, say, Christmas gifts that they wouldn’t usually buy for themselves.

Money Mail has discovered that the big banks are paying specialist firms to track every pound that’s spent on your card.

Many companies, including Royal Bank of Scotland, use an U.S. company called FICO. Its computer program, Falcon, gives you a score between one and 999 every time you use your card. The lower the score, the less likely it is that the transaction is being carried out by a fraudster.

If a purchase triggers a very high score, your bank may call to check the purchase or even cancel your card.

Experts say people visiting places where card crime is more common, particularly cities such as Liverpool, London, Manchester and Birmingham, are more likely to get a higher score and have their card blocked.

One person posting on website Mumsnet claims her bank, Lloyds, blocked her card while she was away from home visiting relatives in Merseyside.

When the woman rang the bank, she says staff told her the card was cancelled as it had been used in an area where Lloyds deemed there to be a higher risk of cloned cards.

Another victim, Claire Pike, described on social network Twitter how her card had been blocked because she had bought something early in the morning — which did not fit with her usual spending patterns.

And there are reports of customers even being phoned by banks about ‘ suspicious’ transactions after they bought melons from the grocer or clothes from Topshop.

James Daley, director of consumer website Fairer Finance, says the confusion is the result of a desperate bid to reduce fraud losses on debit and credit cards.

Even though banks blocked £1.7 billion of dubious payments last year, they still had to shell out £755 million to victims under City watchdog rules that force them to cover the bill when a fraudster steals your details and goes on a spending spree.

‘When banks cancel your card it’s not you they’re protecting from fraud, it’s their shareholders, as they have to cover any losses you suffer,’ says Mr Daley.

‘It’s good that some banks have introduced a more sophisticated approach, but many seem to be erring too much on the side of caution, causing inconvenience to customers whose cards are cancelled for what seem to be innocuous payments.’

Banks have used fraud detection systems for some time. But until recently, most customers have encountered them only when their card has been blocked while on holiday in a foreign country. Now attention has turned to stopping criminals acting in the UK.

The FICO fraud detection system used by RBS works by analysing the spending data for millions of people. It looks at the types of purchases made by bank customers of a certain age or living in a particular part of the country to pick up on general trends.

Banks feed in data about the spending you’ve done on your debit or credit cards to create a file for you. Over time, the software builds a picture of the typical places you use your card and how much you spend there.

The computer can also gather information about your hobbies. For instance, it will make a note if you regularly visit a golf club or gym and spend there.

So, if you then suddenly splurge on a set a golf clubs or posh gym kit, it would know not to raise a red flag because even though the purchase does not fit with your normal spending habits, it ties in with your lifestyle.

The computer program also combs through data supplied by banks listing shops where fraudulent transactions have been reported. If an outlet or chain is being targeted, card spending there will be judged as higher risk.

Brian Kinch, senior partner at Fair Issac Advisors, Fico’s consultancy practice, says you should be prepared for your card to be blocked or have a purchase questioned if you rarely buy technology, but then splash out on a new laptop, tablet, iPhone or computer game for your children or grandchildren as a Christmas or birthday treat. This could raise red flags.

‘Fraudsters typically spend lots in a short amount of time, with electronic items being a typical purchase,’ he says. ‘This kind of pattern of spending really sounds warning signals.’

While this type of software is highly sophisticated — and, according to the banks, is helping reduce fraud ‘dramatically’ — it is not perfect. Each bank treats customer spending differently. So a transaction may be suspicious enough for your card to be cancelled by one bank, but not by another.

As well as embarrassment, customers whose cards are wrongly cancelled without warning can be left stranded in strange towns and countries without access to their money.

Some say they’ve had to go through security checks to get

their card up and running again, including taking their passport to a branch to prove their identity.

A spokesman for trade body the British Bankers Association says: ‘The industry is continuing to tackle financial fraud by investing in new, innovative security tools, including even more sophisticated ways of authenticating customers, such as using biometrics and customer behaviour analysis.’

A Lloyds Banking Group spokesman says: ‘The group takes its commitment to fraud prevention seriously and invests heavily in a range of detection systems to ensure robust controls are in place to safeguard customers.’