Even as banks and payment providers begin the process of bringing more secure "chipped" cards to U.S. shores, debit cards continue to be extremely vulnerable to fraud.
One out of every 5 debit card holders in the U.S. has experienced fraud on their card in the last five years, according to a study released this week by ACI Payment Systems and Aite Group. That's the fourth highest rate among the 17 countries surveyed in the study. Only Mexico, China and India had greater rates of fraud.
It's also not out of the question that you'll be hit with debit card fraud multiple times. In the survey, 5 percent of Americans reported having been victimized at least twice.
Still, few people made long-term changes as a result of experiencing fraud. Just 16 percent of men and 5 percent of women reported switching debit card providers after a fraud incident, and 89 percent were back to using their debit cards within six months of the incident. That's a little surprising, considering debit card fraud can be a pretty significant hassle for consumers. Unlike credit cards, debit cards draw money directly from a consumer's checking account, and must be replaced by the cardholder's bank after a sometimes lengthy investigation.
EMV cards, named for the card companies Europay, MasterCard and Visa, are touted as a way to curb rampant debit card fraud, but the ACI/Aite data seem to call that into question. In the United Kingdom, which implemented a chip and PIN system similar to EMV in 2004, 17 percent of debit card holders reported experiencing fraud in the last five years, just 3 percentage points less than in the U.S.
Interestingly, prepaid debit cards had a much lower rate of fraud, at least in the U.S. Just 5 percent of users reported experiencing fraud over a five-year period. That's a big contrast with credit cards, which were an even more common target of thieves than debit cards. A whopping 37 percent of credit card holders reported having experienced fraud in the last five years.
If you're wondering what you can do to avoid having your checking account emptied out by thieves, there some ways to protect yourself:
- Keep your cards secure and report lost or stolen cards immediately.
- Don't swipe your card if you notice anything suspicious about the ATM or other device you're using.
- Keep close tabs on your account by checking your balance online or setting up text alerts on your phone.
Unfortunately, there's a limit to what consumers can do. A lot of debit-card data is exposed not by careless cardholder behavior, but by hackers breaking into databases used by retailers and others to store their information.
What do you think? Are you concerned about debit card fraud? Have you ever been a victim? Share your experience.
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