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Study: Debit card fraud rampant

By Claes Bell · Bankrate.com
Thursday, October 18, 2012
Posted: 3 pm ET

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.

Debit card skimmers like this can easily capture your debit-card information

Debit card skimmers like this can easily capture your debit-card information (photo by ThisIsntExeter)

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.

Follow me on Twitter: @ClaesBell

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31 Comments
Diamethyst
October 21, 2012 at 1:11 pm

Maybe we need to crack down on those places that don't bother to check ID, and don't require even a signature if the total transaction is less than $25 or $50. This is typically the amount that the consumer is responsible for and anyone who gets ahold of the card number or the card itself can break someone $50 at a time. The retailers and rules need to change. I would rather be required to show my ID for every transaction than to be robbed blind by some lame jerk who'd rather steal than work for his or her own living.

Onetimebrown
October 21, 2012 at 1:02 pm

Hi;

Be careful of credit unions also. We had over 700 dollars taken from our account. When I reported to the credit union, the manager could not find our pending activities report for the time that the loss occurred. Fortunately, I had printed a copy prior to going to the office. I was told everything from I need to manage my card more carefully to the amount couldn't verify it because there was no record. Note that pending accounts from every other period was available - just not that one. Just saying that all institutions bear watching.

ROM
October 21, 2012 at 11:59 am

Uuuummmmm... has anyone considered that this may be a result of using a debit card for online transactions on sites that you're not sure are green or having a really easily hackable password like "1234567"? Maybe don't keep your financial information on multiple websites and delete it as soon as you're done using it. Maybe only use store bought gift cards for online transactions. Maybe never use the same password twice. Maybe randomize the passwords to make them secure as possible. Random strings of capital or lower case numbers with special characters work best. It may be a pain, but at least your information isn't constantly stored in the system.

In the real world: cover up the keypad when typing in your pin. Carry cash and use that in restaurants instead of a debit card (Keep in mind some waiters and waitresses make under minimum wage, so the temptation to steal card numbers can be relatively high. All they need is the number on the card and the security code to make online purchases). If you must use a card at a gas station or other place, don't just tell them your PIN. Insist on typing it in yourself. Make sure your card has fraud protection. Never ever give out your card information over the phone. Especially a cell phone... you know, the kinds of phones you can pick up on modified police scanners.

Neal Schwartz
October 21, 2012 at 11:12 am

A lot of people have a debit card that have the Mastercard or VISA logo on the front that is linked to your checking account. That is a really bad idea. I have an old fashioned ATM card that requires a PIN to be used. If you ask your bank, they will issue one to you. The reason banks love the other cards is because they make money on every transaction.

Mike
October 21, 2012 at 10:58 am

Don't use Debit cards for purchases. The banks charge you to access your own money at no expense or service to them. If you can have the charges debited from your account at point of sale, and control spending to prevent over drafts (using debit card); then you can keep your money in the account and pay off a credit card bill once a month. Use a Reward card for greater benefit. With online banking, the account is free if you have auto deposit of your paycheck or pension etc., and the daily balance is a click away all the time, no need to register your checks. Pay the balance twice a month to keep amounts reported to credit bureaus low, and you will have a FICO score in excess pf 800. Never use a credit card with a fee attached, and you have free checking and free credit. HUZZA!!

Melissa
October 21, 2012 at 9:51 am

I went shopping at the mall in the morning and my bank called me a few hours later because my debit card was used over 1000 miles away less than 2 hours after I used it near my home. The fraudster used it to buy a large number of men's dress shirts and then a cookie before it was blocked.

They wiped out my balance and put me into overdraft. My bank told me I had to call the retailer and file a police report. Despite providing definative proof of the fraud and a police report within 2 days of the fraud, the bank took the full 30 days allowed to recredit my funds and erase the overdraft.

I rarely use the debit card directly anymore. I use and pay off the credit card every month, since they don't hold my life hostage.

Ed
October 21, 2012 at 9:29 am

NEVER had a bank account in 30 years. Only Credit Unions.

thomas
October 21, 2012 at 9:23 am

yea f**k the banks they r stealing our money and the government says its ok

VINNY
October 21, 2012 at 8:44 am

I have used a debit card, at the same bank, for over 18 years now. Never had a problem until last week! I just took the money out of checking and waited the 3 day period to clead and credit the theft amount.

I have 2 accounts. One, My main family account. And the other my main expense account. It is not linked to any other account and it something is stolen, there is limited liability. The amount was credited in 3 days and the charges incurred from the theft (bank fees and over-draft) were credited.

I will continue to use debit as I want NO credit debt looming ove me or my family. I just have to manage money well and it is ok from there!

The real REAL theft is how the huge bank I have.....reported a RECORD QUARTER and have assessed new fees and charges including, "Checking fees $7/mo, transfer sees from savings $4 if in excess of 3/month and transfer fee for overdraft protection (from account holders guaranteed savings) of $10. Take that x hundreds of thousands of loyal users and there you have your new scam!

CREDIT UONION, I WILL BE BY MONDAY! I hate to close my account after 20 years, but hey, I need a record quarter, I dont need to make the BANKS Quarter, for them!

VINNY
October 21, 2012 at 8:43 am

I have used a debit card, at the same bank, for over 18 years now. Never had a problem until last week! I just took the money out of checking and waited the 3 day period to clead and credit the theft amount.

I have 2 accounts. One, My main family account. And the other my main expense account. It is not linked to any other account and it something is stolen, there is limited liability. The amount was credited in 3 days and the charges incurred from the theft (bank fees and over-draft) were credited.

I will continue to use debit as I want NO credit debt looming ove me or my family. I just have to manage money well and it is ok from there!

The real REAL theft is how the huge bank I have.....reported a RECORD QUARTER and have assessed new fees and charges including, "Checking fees $7/mo, transfer sees from savings $4 if in excess of 3/month and transfer fee for overdraft protection (from account holders guaranteed savings) of $10. Take that x hundreds of thousands of loyal users and there you have your new scam!

CREDIT UONION, I WILL BE BY MONDAY! I hate to close my account after 20 years, but hey, I need a record quarter, I dont need to make the BANKS Quarter, foir them!