Picture this: You and your family roll up to an obscure little country gas station off the highway to fuel up. It reminds you of that little station from The Texas Chainsaw Massacre, but nevertheless, you’re on the final stretch of the drive to your family’s cabin on Lake Tahoe, and it’s the only place to stop for miles. You pull out your debit card, slide it into the card reader, input your PIN number, fill up your tank, and drive away.
What you didn’t notice (blame it on those tired eyes and screaming kids) was that the card reader looked a bit . . . off. Not even a day into your vacation, your bank calls and lets you know someone has been purchasing some big-ticket items in your name. Yup, you’ve just experienced debit card fraud.
Ways to Protect Yourself Against Debit Card Fraud
If you’ve ever been the victim of debit card fraud or identity theft, you know how scary, violating and frustrating that can be. How did they get your information?
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In these post-Great Depression era days, there’s a lot more to worry about than someone finding that stash of money buried in the backyard. In today’s fast-paced digital world, there are more and more ways that someone could steal your account information and rip you off. First, let’s look at some common tactics debit card fraudsters use to steal your money. Then, we’ll give you some tips to prevent it from happening.
Watch for Card Skimmers
These tricky devices are inserted into gas station point-of-sale stations or ATM machines. When you insert your card to make a transaction, that information (along with your PIN number if you used one) goes straight to someone who intends to use it for themselves.
Next time you pull up to the pump, make sure to check out the card reader before you insert your card. If it looks worn or loose, use cash or opt for a different pump altogether.
Be Cautious of Intercepted Mail
Isn’t messing with the mail illegal? Well, if someone is trying to get your financial information, they’re beyond the point of caring about what’s right and wrong. These people will go to great lengths to go through your mailbox in hopes of finding a check or a bank statement with your personal account numbers on them. Not only that, they’ll think they hit the jackpot if they find that brand-new card you asked for just last week.
When it comes to your mailbox, it’s hard to control whether someone searches through its contents. The best thing you can do is to look closely at your mail. Does it look like it’s been opened and resealed? Does it have any sensitive account information in it? If so, contact your bank and the sender to freeze your accounts.
Secure Your Online Purchases
With a click of a button, you can purchase a new couch, TV, toaster, or even a horse—you can buy anything these days. But with so many online stores and merchants offering their goods at our fingertips, how do we know our payment information is secure when we go to check out? Well . . . we don’t. The answer may not be to stop purchasing your items online, but we do want you to implement some ways to keep your information safe.
For starters, never purchase anything on an unsecured network. That means if you’re at the public library, you may want to wait until you get home to purchase those concert tickets. And the same goes for your mobile device. If you’re using the free Starbucks Wi-Fi, maybe you ought to put any purchases on hold until you know your information is safe. Plus, how do you know that man on his computer next to you isn’t just waiting for you to make this purchase?
How to Prevent Debit Card Fraud
Now that you know the gist of how debit card fraud happens, it’s time to start putting safety precautions in place to make sure it doesn’t happen to you or your family. Here are some easy ways to make sure you can keep your information—and your money—safe and sound:
- Check your online bank account often (and go paperless).
- Whenever possible, use your debit card as “credit” at the cash register. The less you enter your PIN number, the safer you are.
- Opt for ATMs at your bank over stand-alone ATMs (like at a gas station).
- Always use a secure network when making online purchases.
- Sign up for fraud or ID theft protection.
- Always check card readers when you’re out and about. If it looks off, don’t use it!
- Always dispose of bank statements and sensitive information properly—the shredder is your new best friend.
- Turn off your overdraft protection. You don’t want someone to drain both of your accounts.
How Do Banks Detect and Investigate Debit Card Fraud?
If you’re the victim of fraud, you’ll want to be sure to contact your bank immediately—and that’s if they haven’t already contacted you. Have you ever bought something online and boom—instantly you see an email or text from your bank asking if it was really you making that purchase? (These tend to show up when you’re using a new device to shop or log in to sites.) That kind of over-communication might feel a little like overkill. But it’s a key protection banks use to detect fraud or verify it’s really you who’s cyber-swiping.
Many banks often have special alerts in place, so when an odd transaction comes through on your debit card, they can contact you to see if it was actually you who made the purchase. Just keep your eyes peeled for purchases from places you’ve never been before in amounts you wouldn’t normally spend.
What if Debit Card Fraud Happens to You?
If Your Debit Card Was Lost or Stolen . . .
If you lost your debit card (or if it got snatched), it’s important to let your bank know that you think your card might be compromised—as soon as possible. The Electronic Fund Transfer Act outlines your liability if your card is lost or stolen based on when you report it. To be sure your bank is well-informed, take two steps:
- First, contact your bank by phone to tell them what’s happened ASAP. This gets the ball rolling as fast as possible.
- Second, follow up that phone call with a detailed letter repeating the same things you spoke about by phone. This way you’ve documented that you took every possible step to stop the fraud and recover lost funds.
Once you report the loss, you’re no longer responsible for any fraudulent charges.
If you report debit card fraud before any transactions are made, you have zero liability. If you report within two days, your liability is just $50. If you report within 60 days of receiving your bank statement, you might have to pay up to $500 max of what was spent in your name before you reported the loss. And after 60 days, there’s no end to your liability for unauthorized spending.1
If Only Your Card Number Was Stolen . . .
If those shady characters stole your debit card number (but you still have your card), you are not liable for any unauthorized charges made in your name. In order to have zero liability, you need to report this shady business to your bank within 60 days after your bank statement is sent. If you report the charges after 60 days, you’ll still be reimbursed for charges made in the first 60 days, but you may not be able to recover any illegal spending that happened after that.2
Most debit cards are backed by Visa or Mastercard. In the case of stolen card numbers, this works to your benefit. Both companies offer a zero liability policy—more on that later. If your PIN number was stolen, this policy might not cover you.3
Once you notify your bank, they have 10 business days to do an investigation and then three days to let you know (in writing) what they found. But what about the money that was taken from your account?
Sometimes, banks move like turtles, and it can take a month or more to do an investigation. In this case, they will need to “return” the money to you until their investigation is over. If the charges you’re disputing happened in another state (or if it was a point-of-sale charge), this can potentially double their investigation time. And at the end of the investigation, if your bank decides that the charges weren’t fraudulent, they’ll let you know and take that money right back.4
It isn’t very likely, but it’s possible that you’ll have trouble proving to your bank that some charges to your account happened through fraud. If it does happen, here’s a tip: There are consumer advocacy groups and government agencies set up to help you recover your money.
Listen: It’s better to rely on your own “insurance” than to rely on the bank to make sure you have money when something goes wrong. This is why it’s so important to have an emergency fund! Make sure you have that starter emergency fund of $1,000 in place or your fully funded emergency fund. When life happens—and it will—you want to be ready for it.
Debit Card Fraud vs. Credit Card Fraud
Naysayers will tell you that your “liability” goes up with debit card fraud. But that’s only true if you see unauthorized transactions on your account and do absolutely nothing. Like we said earlier, running your card as credit with every purchase (and skipping the PIN) is the best way to go.
The truth is, if your debit card is backed by a credit giant like Visa or Mastercard (and you use it like a credit card when you make a purchase), you have the exact same protections as a credit card.5,6
Bottom line: Using your debit card is just as safe as using a credit card. Plus, when you use a debit card, you’re using your own hard-earned money. Don’t fall into the trap of using a credit card as a safety precaution. It could lead to more spending . . . which leads to more debt.
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