It’s not only everyday people who get their cards declined. Our somewhat broken credit card anti-fraud system even embarrassed President Obama in New York, where his card was rejected at a restaurant.
“Apparently they thought there was some fraud going on,” Obama said. “Fortunately Michelle had hers,” he added.
The president revealed this incident earlier today, while signing an executive order at the Consumer Financial Protection Board, and encouraged all players in the financial system to make systems more secure and fraud-resistant.
The anecdote underscores a general problem in the payment cards system: that it’s very hard to tell if the person using a card is really the person who’s supposed to be using it, and that the very limited data around a transaction often causes banks to deny legitimate charges, while retailers accept fraudulent ones — both to the annoyance of the credit card holder. (Obviously, it's much easier to tell if you're using Trustev antifraud software, but not everyone does, yet...)
President Obama is also allegedly a holder of a credit card from JP Morgan Chase, which was recently hit by a huge hack, losing the personal data (though not the credit cards or Social Security Numbers apparently) of 76 million households.
Here’s a video of Obama telling the story.