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Learning how to prevent debit card fraud isn't a luxury—it's a necessity.
Debit card fraud is more prevalent than ever as more consumers decrease their use of cash in favor of using their debit cards. In fact, debit card fraud is directly linked to consumer preference for using plastic cards over physical cash.
Pros and Cons of Using a Debit Card
Debit cards can be very convenient because they pay for purchases directly from your bank account so you don't have to pay a bill at the end of the month as you would with a credit card. Additionally, some experts contend that because the money leaves your account as soon as you purchase something with a debit card, you're more likely to spend less than you would with a credit card.
However, there are some downsides to using a debit card. Because funds come out of your bank account immediately, if you find a billing error or experience debit card fraud, it can be a bigger hassle to get your money back (versus with a credit card, where you aren't actually out of pocket any money while fraud investigations are completed). You can also rack up overdraft fees if you're not careful and spend more than is in your account.
What Is Debit Card Fraud?
Debit card fraud can happen in multiple ways. The common denominator is thieves getting access to your debit card number or bank PIN and using that data to steal cash from your bank account or make pricey purchases using your debit card.
Here are some ways you could be victimized by debit card fraud:
- A thief digs through your trash, finds discarded receipts, steals your account number and racks up thousands of dollars in fraudulent charges.
- An unscrupulous waiter or bartender copies down your debit card number and uses it to finance a European vacation.
- An identity thief lures you to a fraudulent website, which obtains your debit card number under false pretenses and uses your card to commit financial fraud.
- Cyber-attackers trigger a data breach at your bank or one of the retailers you favor and run off with your personal data.
- Your debit card is stolen and used to make big purchases before you can deactivate your account.
If debit card fraud occurs without your knowledge, any payments you make out of your bank account could lead to hefty bank account overdraft fees until you discover the fraud.
A regular, daily check of your bank account can reveal when funds are depleted from your account without your knowledge. If you don't have digital access to your bank account, you may have to wait until your bank alerts you of potential fraud or sends your bank statement to discover you've been hit with debit card fraud. If you haven't already signed up for online banking, this is a good reason to do so sooner rather than later.
Debit Card Fraud vs. Credit Card Fraud
Debit card fraud is different from credit card fraud in two key ways:
- When debit card fraud occurs, cash comes straight out of your bank account. When credit card fraud occurs, any fraudulent charges are included in your credit card statement, but no money leaves your account—although you'll still have to pay your bill at the end of the month.
- Normally, credit card companies will refund losses incurred in a credit card fraud scenario, while banks may not provide debit card fraud refunds after a two- to five-day grace period in which you must report the debit card breach. Contact your debit card provider ahead of time to see what your rights are as a cardholder if you're ever victimized by debit card fraud.
Basically, comparing credit card fraud with debit card fraud comes down to this: With credit card fraud, the card provider takes steps to recoup any financial losses. With debit card fraud, you, the debit card holder, may be largely responsible for getting your cash back.
How to Prevent Debit Card Fraud
Figuring out how to prevent debit card fraud can be challenging, as cyber-thieves are seemingly everywhere. With millions of debit card transactions occurring each day, the opportunity for debit card thieves to strike is abundant.
The good news is there are steps you can take to prevent debit card fraud.
- Check your bank activity regularly. If anything seems out of the ordinary, such as unfamiliar charges to your bank account, immediately call your bank or card issuer. If you didn't authorize the charge, report the fraudulent activity and immediately cancel the card. Also, shred any documents containing your debit card or account number if you don't need them.
- Guard your data. A wallet or purse holding your debit card can easily fall into the hands of fraudsters or simple thieves who may immediately start charging purchases on your card. Make sure you keep your wallet or purse in a safe place, and if it is stolen, call your bank immediately to cancel your debit card.
- Be careful about where you store your data. Don't store your debit card number or PIN—or other relevant personal data like a Social Security number—on a smartphone. It's too easy for debit card fraudsters to dig the data out and use it to commit debit card fraud.
- Keep your debit card safe when shopping online. While shopping online may sometimes be safer than using your debit card at a physical location, there are still precautions you must take when it comes to electronic transactions:
- Be sure that any page asking you to enter debit card information has "https" in the address bar (the "s" means secure) and includes a padlock icon near the address bar.
- Avoid phishing scams, which generally come in the form of fraudulent emails pretending to be from banks or retailers.
- Don't respond with any personal information unless you made the contact first. Legitimate businesses will not ask you for your debit card number without a valid reason.
- Avoid making purchases on unsecured networks in retail locations such as cafes and the like.
Stay Vigilant to Prevent Debit Card Fraud
You can never go wrong calling your card issuer and asking why certain charges are on your bank statement. And building card safeguards to better protect yourself against debit card fraud is both simple and effective. If you don't take debit card fraud seriously, card thieves will—at your expense.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on April 16, 2019, and has been updated.