Debit cards are different
Would you give a thief direct access to your checking account?
No? Unfortunately, you may be doing just that when you use your debit card. Debit cards may look identical to credit cards, but there's one major difference. With credit cards, users who spot fraudulent charges on their bill can simply decline the charges and not pay the bill. On the other hand, debit cards take money directly from your checking account, rather than from an intermediary such as a credit card company.
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Because of that, even clear-cut cases of fraud where victims are protected from liability by consumer protection laws can cause significant hardship, says Frank Abagnale, a secure-document consultant in Washington, D.C., and subject of the popular film "Catch Me If You Can."
He cites the example of The TJX Cos. Inc.'s T.J. Maxx data breach that exposed the payment information of thousands of customers in 2007. The incident resulted in $150 million in fraud losses, and most of it was pulled directly from customers' bank accounts. While credit card users got their accounts straightened out and new cards in the mail within a few days, the case created huge problems for debit card holders, who waited an average of two to three months to get reimbursed, Abagnale says.
While debit card fraud is always a possibility, being careful where you use it can help keep your checking account balance out of the hands of thieves.