What it is:
A cancellation bulletin is a list of credit cards that are reported stolen, canceled or compromised in some way.
How it works/Example:
For example, let's assume that John's wallet is stolen. He calls MasterCard to report the theft, and the company places his number on its cancellation bulletin. The cancellation bulletin is disseminated to all the merchants who accept MasterCard.
Later that day, a $5,000 transaction at Nordstrom appears on John's credit card. Nordstrom's point-of-sale (POS) terminal quickly matches the card number to the one on MasterCard's cancellation bulletin. The sales associate sees the red flag pop up, then follows company policy regarding such situations -- this might include keeping the card and calling the police.
Why it matters:
Credit card fraud costs businesses and individuals at least $8.6 billion a year, according to one study. Due to the sheer number of credit cards out there and the massive number of transactions that occur every day, credit card processors need a way to communicate lists of lost, stolen or compromised card numbers quickly and efficiently. The cancellation bulletin is one such method.