However, in some instances, debit theft can cause much greater financial damage than credit card fraud. While federal law limits your liability in credit card fraud to $50, that same limit only applies to debit frauds reported within 48 hours; after that, you could be out anywhere from $500 to the entire fraud amount.
Avivah Litan is vice president at Gartner, an information technology research and advisory company. She says an August 2005 study by Gartner revealed $2.75 billion in ATM/debit card fraud losses over a 12-month period.
"ATM fraud is definitely on the rise," she says.
While victims of credit-card fraud might have to wrestle with their credit card issuers to remove disputed charges from a bill, debit-card victims often face even greater aggravation.
With debit fraud, the thief actually drains the money directly from a checking account, leaving the victim to deal with bounced checks, missed payments and a downward-spiraling credit report while fighting with the bank to correct the wrong.
'Shoulder surfers' catch wave
Thieves compromise ATMs in a variety of ways. Most commonly, they attach a skimming device over the card slot of a legitimate ATM.
After the customer inserts a debit card, the transaction proceeds unimpeded while the thief electronically "harvests" the account data off the card's magnetic stripe.
|Check ATM for signs of foul play|
|When choosing an ATM, keep the following things in mind:|
|•||Use a familiar and trusted ATM, preferably one attached to your bank. Avoid using ATMs in unfamiliar or remote locations, or around suspicious persons.|
|•||Check the card slot, keyboard and machine for signs of tampering. Do not use the machine if the card slot jiggles, the keyboard has an overlay or anything else seems suspect.|
|•||Look for security cameras on the machine and in the vicinity. If they appear suspicious, do not use the ATM.|
|•||Avoid ATMs with signs or messages affixed to them. Banks and legitimate ATM owners do not direct customers to another machine with signs attached to the machine itself.|
|•||At night, choose a familiar, well-lighted ATM.|
Crooks simultaneously record the PIN number during the transaction by using an inconspicuously placed camera or touch-sensitive keypad overlay on the keyboard. In some cases, a criminal may actually peer over the victim's shoulder (called "shoulder surfing") during the transaction.
Some enterprising thieves take it one step further and install phony ATMs, usually in out-of-the-way locations such as parking lots. At a recent security conference, Robert Morris Sr., former chief scientist for the National Security Agency, said thieves have acquired old ATMs on eBay for as little as $1,000.