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A number of credit card companies - almost all of them - ask to "activate" credit cards when sent to me. Usually it involves calling the phone on the sticker and typing in whole or partial card number.

So my question is - what is the purpose of this exercise? It can not be a security measure - anybody who has the card can activate it. It also next to useless as statistics - they have the usage data and I could activate the card and then never use it too.

So, any educated guesses why everybody does it?

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Most Credit Cards I get have instructions that explicitly say to call to activate from my home phone. Presumably, they use caller ID to verify where I am calling from as a security measure. I also often get asked for details like the last 4 digits of my Social Security Number. –  msemack Dec 6 '10 at 15:51
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4 Answers 4

up vote 7 down vote accepted

If I recall correctly, in order to activate it without another human's intervention I had to call from a phone number they had on file. Otherwise, I believe I would have had to speak to a rep and do it that way. Presumably, that would entail some sort of verification that I was indeed the legitimate owner of the account.

Another possibility, which has little to nothing to do with your account security, is management of the number-space. Cards that are not activated in some period of time (180 days?) can easily be cancelled. Whether this means that they then reuse the number or not, I have no idea. This may be question of reducing their liability, by reducing the number of possible cards that can be used fraudulently, since they can't be used until activated. (Granted, if they still have the sticker on them and there are no safeguards built into the activation process, it would be a trivial matter to activate the card.)

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Hmm... I don't remember if I gave them my phone number. Will try next time to call from different phone to see what happens. I think I activated from different phones without a problem, but not 100% sure, needs clean experiment. –  StasM Dec 5 '10 at 23:53
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@StasM they know what number you're calling from, and compare that to the numbers they got from your credit report. This is why I dispute/remove as many numbers as possible on my credit report; phone numbers get recycled eventually. –  antony.trupe Dec 6 '10 at 5:00
    
At least last time I got a card, the activation window was much shorter, more like 30 days. I think this cuts out some risk of people finding dead-letter credit cards. –  poolie Dec 6 '10 at 6:21
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It's a security feature, intended to discourage casual theft from the mail.

They use your caller id and usually ask you to verify something else.

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A few gut-level responses:

--There's probably something about calling and activating that is part of the "accepting terms and conditions" clause in the agreement between you and the provider. ie. By calling and activating you have effectively said, "I agree to everything in your 15 page 3pt-font terms and conditions."

--If you also have to do the old "enter the last 4 digits of your ssn" (US) this could be regarded as additional security (proof of identity). They can triangulate for this by using your phone number as well, as someone else mentioned.

--And finally, my personal favorite: sometimes I call and get a live person on the other end. And every time that happens I get an upsell spiel ("While the system activates your card, can I ask if you have considered life insurance... do you need more cards... would you like a lobotomy..." etc.).

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I took the lobotomy offer once. Total rip off. I can still feel emotions. –  MrChrister Dec 6 '10 at 0:28
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I would guess that it's to keep their "Activation" call center team employed (similar to gef05's third bullet for upsells).

Based on my anecdotal and real world experience as an occasionally irresponsible card holder, I can tell you that on two occasions (one with Citi where I have been a member over 15 years and another with Buy.com as a new member) when I neglected to activate my card both systems enabled the card without my knowledge. I was so surprised too because I assumed the Buy.com card was not active until I saw it on my annual credit rating history report. When I spoke to the phone rep for the Buy.com call center, he was not surprised and confirmed that it was correct behavior for their system at the time.

Only one card uses a protocol which I would consider secure. My credit union sent my replacement ATM card which was "activated" by using it and punching in the PIN at the machine.

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