This week, an American-born journalist living in Israel was told that her Chase Bank debit card was no good at a home furnishings store. Shortly thereafter, she discovered that all point-of-sale purchases with the card were declined, although she can make ATM withdrawals (only up to about $200).

Curious, she called Chase and was told that her American credit card can only be used in Israel with strict limitations because “it is a high-risk country for fraud and is on a US government OFAC list.”

A few days earlier, an American tourist visiting Israel had a very similar experience. She has been visiting Israel for decades, and used her Chase credit card here without any problem. But not this time. Contacting the bank back home, she was told that she could withdraw cash on the card, but could not make purchases on it — again, because of fraud concerns. (Both sources ask not to be named in this article.)

OFAC is the US Treasury Department’s Office of Assets Control whose mission, according to its website, is to “enforce economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.”

In other words, OFAC administers US sanctions on adversaries like Iran, Syria, Cuba, North Korea, and Belarus. It also maintains a public database of ‘Specially Designated Nationals’ (SDN’s), individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries or terrorist groups and drug traffickers.

John Sullivan, a spokesman from the US Treasury Department, told the Times of Israel that “Israel is not on any OFAC lists whatsoever.”

‘We’re in the business of enforcing sanctions on rogue regimes – Iran, North Korea, and the like – and I can assure you that OFAC has nothing to do with Israel, an important US ally’

“We’re in the business of enforcing sanctions on rogue regimes – Iran, North Korea, and the like – and I can assure you that OFAC has nothing to do with Israel, an important US ally.”

When the Israeli journalist related this conversation back to Chase, she was told again – by four different people – that her card was blocked because Israel is on an OFAC list.

“I told one of the Chase customer service representatives named Troy that I’m a journalist and asked if I could quote him in the name of Chase Bank that the card is blocked because Israel is on an OFAC list.”

“He said, ‘Definitely. 110%’”

The journalist and the tourist are not alone in being unable to use their American cards for point-of-sale purchases in Israel. On Internet forums, there are hundreds of similar complaints, but no clear understanding of who is behind the action to block the cards or why.

The Iranian Central Bank. (photo credit: CC BY-SA Ensie & Matthias, Flickr)

(Tehran, Iran) The Iranian Central Bank is the target of recent US sanctions, enforced by OFAC. (photo credit: CC BY-SA Ensie & Matthias, Flickr)

Curiously, a handful of American credit unions have published warnings on their websites that their debit cards will be blocked in Israel and other countries due to fears of excessive fraud. At the Langley Credit Union, which serves NASA employees and their families, Israel is in a group with Japan, South Korea, and Malaysia where ATM transactions up to $205 daily will be approved, but all credit and debit card transactions at points-of-sale will be denied.

Bulgaria and Romania fall into a more stringent category whereby PIN-based transactions will be denied. Iran, Cuba, and Myanmar (Burma) are in a third category in which all credit, debit, and ATM transactions will be declined until further notice.

An Iowa-based credit union affiliated with employees of John Deere lists Israel among countries where credit card transactions “are either blocked due to excessive fraud or are sanctioned countries ordered by OFAC.” And an Alabama-based credit union also lists Israel as a country “blocked due to fraud risk.”

The American-Israeli journalist wonders if she’s caught up in what appears to be a trend of banks actively seeking to drive away small-time customers.

Crain’s New York reported in March:

As changes in government regulations and consumer habits make it harder for banks to profit from the bedrock business of branch banking, Chase — the largest bank by far in the New York market — is taking steps to weed out unprofitable customers and focus on wealthier ones.

That means closing less-productive outposts and nudging clients with bank or investment accounts under $100,000 to do their business via ATMs or online, while opening branches in posh locales and offering more services to people who have at least $500,000 in assets.

Similarly, The New York Times reported a story in March about a bank analyst who, as he tells it, discovered that his Wells Fargo bank branch in Tampa made a conscious decision to dial back on customer service in order to spend more time focusing on selling its products:

Mr. Bove noticed the difference even before the Wachovia signs had been taken down from his branch. As he tells it, the booth where a manager used to stand to greet customers was removed and replaced by a desk where an employee was selling bank products.

…Mr. Bove said he soon began to realize that all the bank employees who were not catering to his whims were instead padding the company’s bottom line.

“Spending time solving problems with people is not selling products,” said Mr. Bove. “It’s wasting time.”

A Chase Bank spokesman said, “Tourists visiting Israel can use their Chase credit or debit card for ATM withdrawals and point-of-sale transactions. We strongly encourage customers to inform us of their travels abroad so we can alert their account.”