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Here’s an amazing statistic. There was a survey done recently by one payment systems company that found 42% of the respondents said they had been the victims of pre-paid, debit or credit card fraud within the past five years. This means that nearly half of us had been the victims of fraud associated with one of our cards. If you weren’t the victim of credit card theft some time during the past five years, you could consider yourself fortunate.
A big difference
The first thing to understand about debit card fraud is that there is a huge difference between debit cards and credit cards. If you find a fraudulent charge on your credit card, you can just deny the charge and not pay it. However, debit cards take the funds right out of your checking account. This means there is no credit card company in the middle that would act as a buffer. If you’re subject to debit card fraud, you could be hurt big time. One example of this is the T.J. Maxx data theft where there was $150 million in fraud losses and much of it came directly out of the store’s customers’ bank accounts.
A few days versus a few months
People who had used their credit cards at TJ Maxx got their account straightened out and new cards in just a few days. However, according to secure-document consultant Frank Abagnale, debit cardholders had to wait two to three months before their money was reimbursed. Ironic note: Frank Abagnale, the secure-document consultant, is the same Frank Abagnale who was a notorious imposter and escape artist and whose story was told in the movie Catch Me If You Can.
#1: Watch out for what are called phishing emails
These emails are made to look as if they had come from you bank, retailers or the IRS. If you click on one of these, you’ll end up on a fake website that will try to trick you into giving up your bank account numbers or debit card numbers. Any time you receive an email from one of these organizations, think very carefully before you click on anything. You might also call your bank or the credit card company and ask if they actually sent the email.
#2. Review your statements
When it comes to reporting debit card theft, speed is critical. If you report a fraudulent item within two days of receiving your statement, you will be liable for just $50. However, if don’t report it for 60 days, your liability increases to $500. And if you wait longer than 60 days to report the fraud, you could end up paying the entire balance. In comparison, if you lose your credit card you can only lose $50, although most credit card companies won’t charge you anything. And the FTC says that if your credit card number is stolen you’re not liable for anything.
#3: Don’t let it out of your sight
Watch when your card is swiped by clerks. Take care about handing it over if you want someone to get your groceries. They would have your security code, your name and your card number, which is all they need. They could literally vacuum out your account. It might be impossible to never let your debt card out of your sight but when you do, make sure it’s with a retailer or restaurant you can trust.
#4: Ditch that debit/credit card
One police detective recommends that you get rid of that combination debit/credit card and use a credit card and a separate ATM card. However, this represents a trade-off. A number of banks now require that you make a minimum number of purchases with one of their debit/credit cards to qualify for a high performance bank account.
