It is a common industry practice to analyze the data for trends.Several issuers offer cardholders annual summaries of their spending that categorize purchasing by type of merchant and amounts spent.In exchange for the convenience of using plastic, you also give up something some people hold dear -- privacy.
She says specific information about items purchased (that you bought a gallon of milk, for example) is not included in the data transferred from the merchant.
"As a general rule, the specific transaction information is not transmitted to the issuing bank.
According to the lawsuit, Compu Credit used an undisclosed behavioral scoring model to track customer purchases.
The company lowered credit limits on cardholders who shopped at certain establishments or used certain services, including pawnshops, massage parlors, tire retread shops, marriage counselors and bars and nightclubs.
This information can be a handy tool to help families budget for the coming year and determine where they can cut back in spending.
Credit card issuers must state their privacy policies regarding personal information of customers.
Mining for data Known by a number of terms in the industry, including behavioral modeling, data mining and psychographic behavior analysis, the practice of mining internal credit card issuer databases for customer spending trends and other patterns is not new.
Issuers have been analyzing data perhaps since the first credit cards were issued.
Representatives from the four top credit card issuers -- Bank of America, Citi, Chase and Wells Fargo -- declined to discuss details of how they use purchasing data internally. A spokeswoman from a banking industry trade group acknowledged that the practice is common.