Are Debit Cards Protected From Fraud? | Banking Advice
Key Takeaways
- Thieves can obtain your debit card information by skimming your card, breaching your data or accessing your card details without authorization.
- Contact your financial institution as soon as possible if you see any unauthorized transactions in your debit account.
- Secure your card information and monitor your account regularly to protect yourself from debit card fraud.
Debit cards are as vulnerable to theft as credit cards and offer limited fraud protection. Depending on how soon you report the fraud, you could be responsible for up to $50 in unauthorized transactions – or the full amount.
Learn about debit card fraud protection and what you can do to minimize your liability.
How Can Someone Use my Debit Card Without Having It?
Thieves can use your debit card information to create a duplicate card even if you haven’t lost it. These are some of the ways thieves obtain debit card information:
- Card skimming. Criminals can steal your card information from an ATM or point-of-sale terminal compromised by a card skimming device.
- Breaches. An online data breach could expose your debit card number.
- Unauthorized access. Someone with unauthorized access to your bank account could see your card details.
Are You Liable for Unauthorized Debit Card Purchases?
In most cases, federal law limits your liability for unauthorized debit card purchases to $50, provided you report the fraud within two business days of discovering it.
If you report debit card fraud after two business days, but less than 60 calendar days after receiving your account statement, you could be liable for up to $500. If you don’t report the fraud within 60 calendar days of receiving your statement, you could be liable for any amount stolen from your account.
You should regularly review your bank statements and report any unauthorized transactions immediately.
“Many banks allow you to set up alerts when there’s activity on the card,” says Freddie Huynh, co-founder and CEO of Delos Financial Technologies. “But even with all the convenience that online banking provides us, at a minimum, you should still check your statements monthly.”
How to Report Debit Card Fraud
Contact the issuing bank or financial institution immediately if you suspect debit card fraud. Most banks offer a 24/7 phone number and online options to report fraud.
“Have the phone number on the back of the card keyed into your mobile phone as a contact right now, before something bad happens,” says Robert Siciliano, security expert and CEO of Safr.me.
After you contact the issuing institution, file a police report and monitor your account for further unauthorized transactions.
When to Use a Debit Card vs. Credit Card
Using a credit card for most transactions is safer, as major credit card issuers typically offer zero liability for unauthorized purchases. Under federal law, your debit card liability is limited to $50 if you report the fraud within two days.
A wise fraud-protection strategy is to use a debit card only when you need to withdraw cash from a bank ATM.
That said, a debit card may be your preference for money management. “A debit card is typically better to use if you don’t want to risk incurring potential interest fees,” says John Schmoll, founder of personal finance website Frugal Rules.
How to Protect Your Debit Card From Fraud
The stakes are high with debit card fraud, as thieves can wipe out your entire account with no way for you to get your money back if you don’t report the fraud in time. While no one is immune to debit card fraud, you can take these steps to limit your potential for card fraud:
- Secure your physical card. Keep your debit card in a secure place, and don’t share your PIN.
- Be cautious at ATMs and payment terminals. Look for skimming devices attached to ATMs or payment terminals. Bank ATMs may be more secure than ATMs at stores.
- Turn off overdraft protection. Some banks offer overdraft protection, which allows transactions to go through even when you don’t have funds to cover them – and this could dig you into a money pit if a thief makes charges on your account.
- Use secure online banking. Use a secure connection when you access your bank account.
- Be alert for phishing scams. Always verify the authenticity of the source before providing any sensitive information.
- Set up alerts and monitor your account. Use alerts to get notified of unusual activity, and check your account regularly to detect unauthorized transactions or suspicious activity.
“Once a card is used in a public space, it is vulnerable to theft, and there’s no way to prevent that theft,” says Siciliano. “All one can do is monitor their transactions, look for anomalies, and report them as quickly as possible.”
