I have been watching this thread (and similar ones) with some interest.

I've seen the question posed several times about why it is that accounts are getting flagged and reviewed manually.

As a former fraud investigator for a credit card company, I thought I might jump in with a quick comment or two.

The reason your accounts are being flagged likely has little or nothing to do with earning mileage. That's right, probably NOTHING to do with mileage.

See, the cash/balance transfer game is a common element in credit card fraud rings.

How does it work?

Well, it all starts with one (or several depending on the size of the scam) legitimate credit card. I say "legitimate" card loosely. Often it is opened by taking a presolicited offer that someone unwisely dumped in the trash without shredding.

Then, the individual(s) opens one (or usually many, sometimes into the hundreds) of credit cards with various banks/cc companies/stores/etc. and uses them to make small purchases.

The legitimate card is used to make payments on the new fraud cards in order to establish some type of history on the cards for credibility. Usually the payment on the legit cards is covered by return behavior on the fraud cards. Cash transferring is common between cards which often have names of a "spouse". Often on store cards, gift certificates will be bought with one card and then used to make a payment on another.

Then, when a payment history pattern is established, BAM, the scam kicks in... the individual goes for credit line increases on all the cards and goes on a spree... usually for cash advances and (in the case of high end stores) pawnable merchandise. By the time the fraud is detected and the accounts closed, the ring has made out well.

Anyway... just about any company with a good fraud investigation department is going to flag accounts that have this shifting behavior going on. It likely has little to do with mileage earning and everything to do with suspected fraud. The fact that it is going on between accounts between two cards with the same name or same surname or same mailing address (or even city)? Suspect. The fact that it occurs on a regular (and sometimes even predictable basis)? Suspect.

If that doesn't discourage you, I would also caution this. If you are having accounts closed and then go to apply for a card somewhere else, and your credi bureau shows high balance or high activity closed accounts (or possibly has even been flagged by the issuing company as a potential fraud), it is not uncommon for this to lower your credit score enough to flag a manual review.

It is not uncommon on a manual review for an investigator from one card company to call an investigator the company where the card was closed to find out why. Companies are very prone to cooperating when it comes to preventing fraud losses. We were always very discreet about this, but a simple "we wouldn't issue to them again" goes a long way towards damaging your credit".

In our computers, these individuals were noted with an X and anytime their social security number or physicial address (or in some cases surname) came up on an application, it was automatically queued to the fraud desk to approve or decline.

I just thought this might be of interest to my FT friends who I care about... ultimately, the $$ you make on free tickets may pale in comparison to the $$ you pay due to marginally higher interest rates due to damaged credit, especially when it isn't something YOU can see on your credit bureau.