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Study: Debit card fraud rampant

By Claes Bell ·
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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Dean Pack
November 09, 2012 at 10:59 am

Well it looks like to me that the credit card card situation has opened up a can of worms. the fact is for every action there's a reaction, but as long as these thives exist it threatnes human survival,,, as an example the computer fraudelent people from Europe decent which is in many countries NOW that offer you millions to get their stache into this country which they give you a different story every time. I spoke with the Royal Ca Mounty Police (RCMP) and I was informed that when they cought these people they were deported to their country, "but not punished for this crime" they turn around and get a different passport and return to one of the countries they are headquarted in. Is this what governments call punishment? Hmm sounds like an enterprising business to me, What do you think China would do to these people? but wait, if you are a citizen of the US and were to commit the same crime, punishment would be severe, and would probably say they don't want to create an international incident and the problem would continue, but of course in general I would have to give the US a failing grade for leadership, and believe it is going to get much worse so brace yourself.

October 26, 2012 at 9:51 pm

I am a victim of debit card fraud today and shocked that someone can make an imprint and has your pin. High time banks int he US got the electronic chips..

October 26, 2012 at 11:35 am

@vinny. the transfer fee you recieved is covered in federal compliance. check your disclosures. should have been provided under reg dd at account opening.

also do not blame banks for adding more fees. that can be blamed on your federeal government. the reason is that they have changed the way overdrafts can be charged. so you are now paying for people who can not or will not balance their check book.

also large banks are needed. how would large businesses get access to lending if you restrict the size of banks to impractically small sizes just because you don't like the fact they are for profit businesses. or do you want the socialist approach of one government run bank. sounds like a slippery slope to me.

October 23, 2012 at 3:07 pm

1. Id theft will continue until the police take it more seriously.

2. Credit card fraud is just as bad. They dont believe you and they do come after you. Wih debit cards, the bank got their money.

October 21, 2012 at 7:06 pm

I got hit in 2 states and 3 countries and wellsfargo was on top of it and declined all of them until they contacted me, they saved me alot of money or time, thanks.

October 21, 2012 at 6:11 pm

To Neal Schwartz ~ My debit card has a Mastercard logo on it but I still have to have and use a PIN number. I don't know what kind of debit card you had but I've never heard of one that didn't require a PIN, whether it was Mastercard or Visa.

October 21, 2012 at 3:38 pm

I have been hit 3 times on my Discover Card.(online purchases). They were investigated and resolved. Neither the Discover investigator or Police inform you what happened, or give YOU the address and NAME of the USER. YOU WANT TO STOP THIS ACTIVITY? GIVE THE NAME and ADDRESS of the PERP. DO NOT hold me responsible legally and I WILL EXTERMINATE THE PERSON OR PERSONS INVOLVED!

Wilma Ralls
October 21, 2012 at 2:44 pm

I don't understand how this article could be titled "Debit Card Fraud Rampant" when the truth is, from the article itself, that credit card fraud is a full 15% HIGHER than debit card fraud. How misleading can you GET! In my book this is really MEDIA FRAUD, posing as an article with a legitimate point to make.

October 21, 2012 at 1:46 pm

Sorry I meant to say Best Buy not Block Buster.

October 21, 2012 at 1:45 pm

Simple solution to curtail most of the fraud going on. Merchants like Block Buster check the last 4 digits on the front of the card with the last four digits on the receipt. If they don't match, there is a problem. That would eliminate most of the fraud going on.