Credit card horror stories

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To keep in spirit of the day of the dead, I’ve culled the most recent bone-chilling headlines dealing with credit cards.

Here’s one story of the undead. When Rita Katz applied for a credit card at the Gap, she was denied for an unexpected reason: Her credit report said she had kicked the bucket.

Katz, who hasn’t made that final trip, asked her attorney to write a letter to raise her from the dead. No such luck. Only a local ABC news team investigation revived her on her credit reports, so she could qualify for the credit card.

How could this happen? There are two ways, says John Ulzheimer, president of consumer education at One, if you share a Social Security number with a deceased person, the mix-up can occur. Or, if your joint account holder or co-signer passes away, the credit card issuer will report it as “deceased” on the credit reports of both liable parties, Ulzheimer says.

“Clearly, dealing with (the first one) is much more difficult because the Social Security Administration is involved,” he says. “Dealing with (the second) is much easier because you’re just dealing with one lender.”

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This second scary scenario seems all too common: the stolen credit card.

In the last several days, there has been a report about a Tennessee teenager who posed as a police officer to steal credit card numbers; a T.G.I. Friday’s waitress in North Dakota who took off with a diner’s card and spent $25.60 at Walmart; and thieves who obtained a Hawaii senator’s credit card digits and went on a real shopping spree at Walmart, spending $12,000!

Fortunately, your liability for credit card fraud losses is limited to $50 by law. But if you want to avoid the hassle of a stolen card, keep tabs on your account, set up automatic alerts and notify your issuer once you spot odd activity.

And that brings me to the last, and possibly most frightening, tale: Visa as Big Brother. Last week, the Wall Street Journal published a story revealing that MasterCard and Visa were exploring new ways to sell targeted online ads using consumer data.

One of Visa’s brainstorms included using information from DNA databanks, credit reports and social networking sites to create better consumer profiles. It’s actually seeking a patent for it. Now, that’s horrifying. Fortunately, Visa is only in the planning stages, so far.

Visa tried to quell worries on Friday by saying it would only share account-specific information when given permission by the customer. But it didn’t back away from possible plans to virtually use customer blood for profit.

“Like any innovative company, we consider a lot of ideas for future products and take action to protect them, as evidenced by our exploratory patents,” said Russell Schrader, Visa’s chief privacy officer in a company blog post. “So whatever the future holds, we will continue to work to maintain the high standard of security and privacy that we have always followed as we handle transaction data.”

Does that scare you?

Follow me on Twitter: @JannaHerron