No, no, no

I could hardly believe what I was reading in the year 2008.  The title of the Businessweek article was Your Lifestyle May Hurt Your Credit ...Lenders may be monitoring your bar tab or marriage counseling bill—which could be costly for consumers.

The article then proceeded to say that credit checking companies were looking at credit card purchases at: "tire and retreading shops, massage parlors, bars, billiard halls, and marriage counseling offices."  The article said clearly that the author considered this to be an invasion of privacy.

So what got my hackles up?

Remember I was a key organizer of MasterCard.  The creation of MasterCard came about three years after I had done the in-house marketing research on Bankamericard (later renamed and reorganized as Visa). That was 1964.

My research determined that credit card purchases at tire shops, hair dressers, bars and massage parlors were nearly always associated with credit card defaults.  The reason was obvious.  These were the places that were handling stolen goods and other criminal related transactions. 

So a credit card user would have his or her card used at one of these enterprises and then split the money with the business and default on the card payment.  These kinds of businesses were associated with the resale of stolen tires, prostitution and some drug transactions. Bankamericard took away all the credit card privileges from businesses that were in this category and stopped card use of people who were using the cards at these places.  That was 1964. 

The same scam is obviously still going on in 2008.  It has nothing to do with invasion of privacy.  It has everything to do with credit card scams.