More and more consumers are using debit cards instead of credit cards in their daily consumption. The number of places and locations where you can use a debit card has skyrocketed. Many people prefer to pay with them instead of building credit card balances and generating interest.
From 2003 to 2008, debit cards increased from 47.7% of the purchase of plastic products to 58.9%. The Nielsen report is a newsletter that follows the consumer payments industry and predicts that this number will exceed 67% by 2013.
This increase in the use of debit cards is drawing the attention of thieves. As for usage increases, so does fraud. There are many measures you can take to prevent and tackle debit card fraud. Before studying them, it is important to know the difference between credit card fraud and debit card fraud.
The difference between credit card fraud and debit card fraud
The main difference between credit card fraud and debit card fraud is that the two types of cards work differently. If you use a credit card, you set up a balance with the credit company, and the balance will accrue interest until you pay it off. Use a debit card to withdraw money directly from your bank account.
Thus, if you discover that your credit card has been used fraudulently, the balance has not been paid when the credit company investigates the fraud. But for debit card fraud, the money is taken directly from your account – you will not refund the money until the fraud claim is resolved. Even if your request is resolved, when the bank investigates your claim, you can use up the entire balance of your account within weeks or months, which is a major inconvenience, especially if you want to pay immediately.
Different liability rules for credit card fraud and debit card fraud
Another big difference between credit card fraud and debit fraud is that different federal regulations cover each type of card’s responsibilities. If you are using a credit card, even if you used the card before reporting the loss, the maximum liability for fraudulent use of the card is $ 50. If the loss involves your credit card number but not the card itself, you are not responsible at all for unauthorized use.
The liability rules for debit card fraud may differ. It is the personal policy of the company, not federal law, that determines your responsibility. In general, your liability will depend on how quickly you report that you have noticed that the card has been lost or that the card has been used fraudulently. If you report the loss within two business days, the maximum liability for fraudulent use is $ 50. For more than two days, you can be liable for up to $ 500. If you report fraudulent use of the card after 60 days, you may be held liable for unlimited liability. Yes, unlimited liability. This means that if you wait two months before reporting fraud, you can clean your entire account and take responsibility for it. When choosing a debit card, carefully review the company’s liability policy; Visa, for example, has a useful zero liability program.
It is Important to Report Debit Card Fraud Quickly
This potential unlimited liability means that it is essential to report fraud quickly. If you think you’ve lost your card, or suspect fraudulent use of your card, report it immediately. The risk of someone cleaning out your account, and being liable for it, outweighs the inconvenience or embarrassment of discovering your card was actually in a drawer or that what you thought was a fraud was just a purchase you forgot about.
Reporting a lost or stolen card quickly will also keep you from being charged for any checks that might bounce on your emptied account.
Tips to prevent debit card fraud
One of the easiest ways is to keep a record of the card itself and the money that has been debited from your account; keep the bank’s phone number securely in a separate location so you can call immediately if the card is lost or accidentally picked up.
Unfortunately, thieves have found a way to commit debit card fraud without actually stealing your card. The most popular is called “skimming.” In this case, thieves will set some devices. When you enter a PIN at an ATM, air pump, restaurant, or store, these devices will capture the magnetic stripe and keypad information. . Skimming experts recommend that consumers avoid using cards at gas stations but only use ATMs located in banks (which are more difficult to hack and monitor), and again pay close attention to bank accounts.
Smart thieves who can access your bank account start with small withdrawals to test the waters, and if the initial debit card fraud goes unnoticed, they will quickly switch to larger purchases and empty your account.
To avoid fraud and keep liability to a minimum, it is worth developing the habit of carefully observing your account – this habit can also benefit your budget. If you do fall victim to debit card fraud and wait for your request to be resolved, it is also good practice to make sure you have enough money to cover the months in your savings account.