How does a company know your new credit card number before you give it to them?

May 11, 2023, 10:53 PM | Updated: 11:04 pm

SANDY, Utah — If you cannot stop automatic payments from hitting your credit card, you might cancel that card and get a new number. However, when Kevin Patterson tried that, his credit card company gave his new number to the very company he was trying to stop.

Patterson is making payments on a debt that he owes. Every month, he pays $150 towards that debt using his Capital One credit card. When he was ready to make the final payment to pay off the balance, he says he checked with Capital One to ensure those automatic payments stop.

“They’re my credit card company,” he said. “I can say, ‘pay this guy’, or ‘don’t pay this guy.’”

Patterson says Capital One told him that the best way to stop the payments is to cancel his credit card and set up a new one. He did. The thing is, the payments did not stop. The new card with a new number has been charged by his lender – twice!

“I’m like, well, what if it was fraud? What if it was a fraudulent charge? How do I shut that down? What do I do?” he asked.

This is a subject we have reported on before. Back in 2020, Grant Larimer was a victim of identity theft. Someone used his name and Capital One credit card to sign up for a membership at a Planet Fitness in California. Larimer told us had never been a member.

“Certainly not in Los Angeles.”

He reported the fraud to Capital One which issued him a new card. But then Capital one gave the gym Larimer’s new card number, allowing the bogus charges to continue. Turns out, Capital One as well as other major credit card issuers, will share a customer’s new credit card number with a merchant.

“It’s a service to make sure the customer doesn’t miss a payment just because they got a new card,” said LendingTree chief credit analyst, Matt Schulz. “It allows that card to be updated automatically without you having to take the time to go in and do it.”

But it can backfire when the whole point of cancelling the card was to make the payment stop.

“Updating services can throw people off and can seem a little intrusive for folks,” Schulz said.

“We’re $300 into these guys now,” Patterson said the recurring charge hitting his credit card.

He was able to get in touch with the merchant and get the company to put the kibosh to the automatic charges. But he offers this warning: Just because you cancel a credit card, that does not guarantee the charges will stop.

In a statement, Capital One told us they have digital tools to help customers manage their recurring charges. That includes the creation of a virtual card for a specific store. Then, cardholders can set custom expiration dates that automatically lock their virtual card after a specific date and thus preventing additional charges.

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How does a company know your new credit card number before you give it to them?