Debit Card Fraud
March 22, 2010
Joe,
I keep seeing stories about people who have their bank information stolen from their debit cards. Is this a real threat? What can I do to protect myself?
Jennifer, Moundsview
Jennifer,
Thanks for your questions. People often only think of accountants when it comes to tax time or looking for investment tips. I am, however, trying to protect you financially in other areas, as well. The threat of having your information stolen through your debit card is very real—and growing.
It’s no longer the guy standing behind you at the ATM who is your threat; thieves today are far more sophisticated. And as law enforcement and banks stamp out one technique, a new method arises. The scary part is most banks and credit agencies are putting the onus on the card holder—not the bank—to find fraudulent activity. In order to protect yourself, it is important that you not only keep up to date on the most common techniques, but take steps to protect yourself, as well.
Most people know enough to protect their debit card numbers—and to watch out for servers and retailers who spend too much time looking at the number. But thieves today use technology to steal your numbers. Some crooks insert a small device at the end of an ATM machine that looks like an extension to the card slot. This device uses cameras and wireless communication to send the card number to the thief anywhere in the world—often in places other than America. The thief simply orders a new card with the number.
Other thieves are using gas pumps to steal your information. They use a key to open the pump—easier than you might think—and install skimming machines that read the numbers on each card. The information beamed wirelessly to a cell phone, where the card numbers can be used.
So how can you protect yourself? Well, first, you should consider the difference between a credit card and a debit card. Federal laws dictates that the maximum amount you are liable for on fraudulent charges made with your credit card is $50 dollars. Debit cards, however, fall under a different law, and require timely monitoring. If you notify your bank within two days of the fraudulent purchases, you are limited to $50 dollars. However, if you wait—or don’t notice the charges—between two days and 60 days, you are obliged to pay up to $500. Wait longer than that, and you might be liable for all charges. The lesson here: Watch your card activity and consider switching your debit card to a credit card.
But if you are wary of a credit card (for they have their own burdens), consider getting a debit that requires a pin number for purchases. The pin number is not a perfect system, but certainly better than a card that just requires a forgeable signature.
Some other common tips to protect yourself:
* Never store your ATM card next to your pin number in, say, your wallet. You lose your wallet, you lose your pin number, too. There goes your security blanket.
* Don’t respond to phishing E-mails asking for your bank information. Reputable banks never ask for information in this fashion. These E-mails are always fraudulent, but you would be amazed at how many people fall into the trap.
* Avoid ATMs that appear to have been tampered with or look out of the normal.
* Monitor your financial information carefully. Track your purchases regularly. If you have a joint account with a spouse, don’t be afraid to ask him/her if the purchases are legitimate. Thieves today often start slow—making one or two small purchases a week. These small amounts often go unnoticed. When the conspirator makes a larger purchase later, you have less legal power to reclaim those initial purchases.
Jennifer, I hope this information helps. If you have any further questions about protecting your financial assets, please don’t hesitate to let me know.
Best,
Joe Rapacki
