How to Avoid Debit Card Fraud

Picture this: You and your family roll up to an obscure little country gas station off the highway to fuel up. It reminds you of the one from The Texas Chainsaw Massacre, but it’s the only place to stop on the final stretch of the drive to your family’s cabin on Lake Tahoe. So you pull out your debit card, slide it into the card reader, input your PIN number, fill up your tank, and drive away.

What you didn’t notice (blame it on those tired eyes and screaming kids) was that the card reader looked a bit . . . off. Not even a day into your vacation, your bank calls to ask you about some sketchy purchases being made with your card—in Florida. Yup, you’ve just experienced one of the most common types of fraud: debit card fraud.

Ouch.

 

How to Prevent Debit Card Fraud

So, we can all agree that debit card fraud stinks. But what can you do to protect yourself from debit card fraud? Here are some easy ways to make sure you can keep your information—and your money—safe and sound:

1. Check your online bank account often (and go paperless).
2. Whenever possible, use your debit card as “credit” at the cash register. The less you enter your PIN number, the safer you are.
3. Opt for ATMs at your bank over stand-alone ATMs (like at a gas station).
4. Always use a secure network when making online purchases.
5. Sign up for fraud or ID theft protection.
6. Always check card readers when you’re out and about. If it looks off, don’t use it!
7. Always dispose of bank statements and sensitive information properly—the shredder is your new best friend.
8. Turn off your overdraft protection. You don’t want someone to drain both of your accounts.

Ways to Protect Yourself Against Debit Card Fraud

If you’ve ever been the victim of debit card fraud or identity theft, you know how scary and frustrating it can be. It feels violating, and you’re left wondering how in the world someone else got your information.

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Well, in today’s fast-paced digital world, there are more and more ways that someone could steal your account information and rip you off—we’ve got a lot more to worry about these days than someone finding a stash of cash we buried in the ground.

So let’s look at some common tactics debit card fraudsters use to steal your money plus some tips to prevent it from happening.

Watch for Card Skimmers

These tricky devices are inserted into gas station point-of-sale pumps or ATM machines. When you insert your card to make a transaction, the skimmer sends your information (along with your PIN number if you used one) straight to someone who intends to use it for themselves.

Next time you pull up to the pump, take a close look at the card reader before you insert your card. If it’s loose, or the keys feel spongey or unusually thick, use cash or opt for a different pump altogether.

Using contactless, “tap to pay” devices is a good way to avoid card skimmers. You don’t have to insert or swipe your card, and they provide the same levels of protection and encryption as using a chip reader.

Be Cautious of Intercepted Mail

Isn’t messing with the mail illegal? Well, if someone is already trying to get your financial information, a little mail fraud is no big deal to them. These people have no issues digging through your mailbox in hopes of finding a check or a bank statement with your personal account numbers on them. Who knows—they might hit the jackpot and find that brand-new bank card you requested last week.

So how can you protect yourself from mail fraud? The best thing you can do is to look closely at your mail. Does it look like it’s been opened and resealed? Does it have any sensitive account information in it? If so, contact your bank to freeze your accounts.

Secure Your Online Purchases

With a click of a button, you can buy a new couch, TV, toaster or even a horse—you can buy anything online these days. But with so many online shopping options at our fingertips, how do we know our payment information is secure when we check out? Well . . . we don’t. Now, we know it’s not realistic to expect folks to stop buying stuff online, so let’s talk about some steps you can take to keep your information safe while you do.

For starters, never purchase anything on an unsecured network. That means if you’re at the public library, wait until you get home to buy those concert tickets. And if you’re using the free Starbucks Wi-Fi, put any purchases on hold until you know your information is safe. Plus, how do you know that man on his computer next to you isn’t scanning the Wi-Fi to capture unsuspecting customers’ payment info—including yours. It happens!

What if Debit Card Fraud Happens to You?

Sometimes, even if you’re on your A game, you still wind up falling victim to debit card fraud. If that’s where you’ve found yourself, here’s what you can do to get things fixed.

If Your Debit Card Was Lost or Stolen . . .

If you lost your debit card (or if it got snatched), it’s important to let your bank know you think your card might be compromised as soon as you notice any unknown charges. To make sure your bank is well-informed, take two steps:

1. First, contact your bank by phone to tell them what’s happened ASAP. This gets the ball rolling as fast as possible.
2. Second, follow up that phone call with a detailed letter repeating the same things you spoke about by phone. This way you’ve documented that you took every possible step to stop the fraud and recover lost funds.

Once you report the loss, you’re no longer responsible for any fraudulent charges. And you’ll want to make that report as quickly as possible, since you can be held responsible for purchases made on a stolen card before you make the report.

If you report debit card fraud before any transactions are made, you have zero liability. If you report within two days, your liability is just $50. If you report within 60 days of receiving your bank statement, you might have to pay up to $500 max of what was spent in your name before you reported the loss. And after 60 days, there’s no end to your liability for unauthorized spending.¹

If Only Your Card Number Was Stolen . . .

If those shady characters stole your debit card number but not the card itself, you are not liable for any unauthorized charges made in your name. You just need to report the shady business to your bank within 60 days after your bank statement is sent. If you report the charges after 60 days, you’ll still be reimbursed for charges made in the first 60 days, but you may not be able to recover any illegal spending that happened after that.²

Most debit cards are backed by Visa or Mastercard. In the case of stolen card numbers, this works to your benefit. Both companies offer a zero liability policy—more on that later. If your PIN number was stolen, this policy might not cover you.³

How Do Banks Investigate Unauthorized Transactions?

Once you notify your bank of a fraudulent transaction, they have 10 business days to start and complete an investigation and then three days to let you know (in writing) what they found.⁴ But what about the money that was taken from your account?

If a bank is moving like a turtle and wants to take more than 10 days, they will need to “return” the money to you until their investigation is over. If the charges you’re disputing happened in another state (or if it was a point-of-sale charge), this can potentially double their investigation time. And at the end of the investigation, if your bank decides that the charges weren’t fraudulent, they’ll let you know and take that money right back.⁵

It isn’t very likely, but it’s possible you’ll have trouble proving to your bank that some charges to your account happened through fraud. If it does happen, it’s time to contact one of the consumer advocacy groups and government agencies—like the Consumer Financial Protection Bureau or the Office of the Comptroller of the Currency—set up to help you recover your money.

Debit Card Fraud vs. Credit Card Fraud

Some folks will try telling you that the best way to avoid debit card fraud is to ditch your debit card altogether in favor of a credit card. After all, credit cards have much better protection than debit cards, right? Wrong!

Here’s the deal: If your debit card is backed by a major credit card company like Visa or Mastercard, you have the exact same protections as a credit card.^6,7 Yep, you read that correctly.

Don’t believe us? Take it from Jenny E., a member of our Ramsey Baby Steps Community on Facebook: “When my debit card info was stolen, I just called my bank and told them the charges were fraudulent. They looked into it and reversed the charges. It wasn't overnight, but it was fixed.”

Plus, when you use a debit card, you’re using your own hard-earned money. Don’t fall into the trap of using a credit card as a safety precaution. It could lead to more spending . . . which leads to more debt.

Give Yourself Some Extra Protection

If you want to add an extra layer of coverage, enrolling in an ID theft protection plan is a great option. Just make sure you pick a plan that offers restoration services—that means, if someone starts spending money in your name, the company will assign a counselor to clean up the mess for you.

Our friends at Zander Insurance offer plans like that, and enrolling in one will give you a whole lot of peace of mind. Zander is RamseyTrusted because they’re committed to serving you with excellence and helping you win with money.

Connect with Zander Insurance today!