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 key 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 draw 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."
Take last year's massive data breach at the retailer Target, where 40 million credit card and debit card accounts were compromised in addition to millions more personal information records. Customers' encrypted personal identification numbers (PINs) for their debit cards also were stolen.
Unlike affected credit card users, consumers whose debit cards were attacked faced more of a headache in the aftermath of the breach, as they had to wait for reimbursement while companies straightened things out. And with new data breaches being announced seemingly every month, this is an increasingly common problem.
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 criminals.