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William McKnight

Hello and welcome to my blog!

I will periodically be sharing my thoughts and observations on information management here in the blog. I am passionate about the effective creation, management and distribution of information for the benefit of company goals, and I'm thrilled to be a part of my clients' growth plans and connect what the industry provides to those goals. I have played many roles, but the perspective I come from is benefit to the end client. I hope the entries can be of some modest benefit to that goal. Please share your thoughts and input to the topics.

About the author >

William is the president of McKnight Consulting Group, a firm focused on delivering business value and solving business challenges utilizing proven, streamlined approaches in data warehousing, master data management and business intelligence, all with a focus on data quality and scalable architectures. William functions as strategist, information architect and program manager for complex, high-volume, full life-cycle implementations worldwide. William is a Southwest Entrepreneur of the Year finalist, a frequent best-practices judge, has authored hundreds of articles and white papers, and given hundreds of international keynotes and public seminars. His team's implementations from both IT and consultant positions have won Best Practices awards. He is a former IT Vice President of a Fortune company, a former software engineer, and holds an MBA. William is author of the book 90 Days to Success in Consulting. Contact William at wmcknight@mcknightcg.com.

Editor's Note: More articles and resources are available in William's BeyeNETWORK Expert Channel. Be sure to visit today!

I return home from a trip to San Diego this week and receive a call asking about a $5 purchase made in the San Diego airport on my Visa. The agent asked if I made the purchase. I replied yes, I had. This was no problem for me so far since I understand that thieves often make small purchases to test the card before going to Best Buy and loading up. Furthermore, I hadn’t used this card much when traveling so I can see where it may have looked suspicious. I expected the agent to say something like “thanks, we were just checking” or even “we’ll remove the temporary hold we placed on your card, sorry for the inconvenience.” But those comforting words were not in the cards.

Instead, the agent informed me that she had permanently cancelled the card and was sending me a new one with a new number. I immediately thought of the work effort this was going to cause me – being without the Visa for a week, all the online places I have the Visa in my profile and the recurring charges I have hitting the Visa. But there was no turning back. I’m not sure why she bothered to ask me if it was my transaction since she had already decided my fate.

I worked on some of the early credit card fraud detection systems and understand how the process works. In this case, we have an agent who had the ability to make a radical decision, theoretically saved for the most egregious cases of obvious fraud, as in a card that was reported stolen. Instead it was done for a $5 purchase where a simple phone call could have determined no further action was necessary.

Naturally, they lost a customer in this process, but consider also that I was a good customer, charging personal expenses for years on this Visa and visiting the store the card belongs to frequently. A system could have provided more information to this decision or actually have made it much more effectively. I’m also in a critical geographical zone for this store since Wal-Mart has opened its first “upscale” store right across the street from the store I usually visit. This is a process that Wal-Mart could repeat all over the country, to this stores dismay, if it works. But if the store could keep it's best customers, with good promotions to its credit card holders, it may not work. Therefore, CRM could have played a role based on my historical transaction profile as well as a heightened propensity to churn based on my geography.

Instead, a relationship-ending decision was made without benefit of, at the least, a simple process flowchart or any utilization of the information they surely have plenty of, but don’t utilize for customer interactions. I’ve often said getting the data act together is the hard part, but even though less work is necessary to deploy the data for simple, yet crucial applications, sometimes the barrier is simply considering the full-scale customer experience with the company.

Posted May 13, 2006 6:13 PM
Permalink | 2 Comments |


Individual card issuers create their own rules that govern how they react to suspicious activity on a Visa card. Their main choices are accept, refer, or decline the transaction. In this situation it appears that the transaction was referred to an analyst. The analyst working the case has a number of choices. She could: call, block the transaction, block the card, etc.

I spoke to Ted Crooks, Fair Isaac's Fraud expert, and he agrees that it was very unusual for the analyst to have chosen to cancel the card for a mere $5 transaction.

She could have blocked your card till she got hold of you and verified the transaction, and then removed the block. The fact that she chose to cancel the card could be a case of human error – you could contact the card company and ask for a more complete explanation for why the card was cancelled (the analyst would have had to enter one or more reason codes to justify the cancellation).

It may in fact be that your card was compromised at another merchant or that the card was never the issue but that the merchant at which you used it was compromised in some way. In that case it would be unsurprising if the card were blocked and re-issued. The call might, in fact, be a poorly handled notice of the re-issue. She may have asked you about the transaction to confirm that the card was used at a merchant later discovered to be compromised, or to confirm the recipient of the call was genuine or just as a matter or routine as some issuers use the occasion of a call just to do an extra check of a recent transaction.

If a card is compromised, the notice call will rarely tell you why it is being re-issued because they don’t want to tip off fraudsters that they know about the compromise and because some merchants will sue for defamation if you mention a compromise occurred.

As usual, the use of a system (or misuse of it) is more complicated than the system itself.

Hello James and thanks. Yes, that is the process. Visa "only" authorizes the transactions according to bank specifications and then performs the clearing/settlement of the money in batch. It's up to the banks to set the criteria for transaction authorization and they can do this for everyone, by class of cardholder or even at the individual level. I actually got my start in data warehousing at Visa.

My blind spot in this is what additional benefit does cancelling the card have over simply blocking the card - pending confirmation - and why would an analyst do this, even if a merchant, or even the card itself, was compromised? The Visa system would receive the block immediately and stop authorization. And, if there is no benefit, why would a bank grant an analyst that ability? Cancelling the card would not even stop the manual authorizations from occurring.

I checked my statement and all the transactions on it are mine. I doubt the merchant was compromised since it was a popular airport vendor.

So yes, it's either human error or process error, both of which could have been aided by some information. I find it interesting the stance that the bank takes is to say nothing, not even an apology, which could have saved the relationship.

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