Debit card fraud is particularly troubling for consumers because it can deplete their cash reserves, which is not the case with credit card accounts. Consumers who don't monitor their debit card accounts could end up paying overdraft fees or penalties that may have resulted from fraudulent debits. Furthermore, don't count on getting an immediate refund if money is stolen from your debit card account.
Electronic Fund Transfer Act
The amount of money you could lose if your debit card is lost or stolen is directly linked to how quickly you report the loss to the card issuer. For example, the U.S. Electronic Fund Transfer Act states that the issuer can't require you to accept responsibility for more than $50 of any unauthorized debits from your bank account if you report the loss of a debit card within two business days after you notice it missing. You could lose as much as $500 if you don't report the missing card to the issuer within this time frame.
Immediately report any unauthorized debits you also see on your bank statements, because even if your debit card is still in your possession, the card number may have been stolen. In such cases, you can't be held responsible for absorbing additional fraudulent debits after you report the problem.
DFCU Financial also has additional procedures if you are aware of someone using your debit card at an ATM without your permission. They require cardholders to fill out an ATM Transaction Statement of Fraud Form. You'll want to check with your bank or credit union to see if they also have a similar form.
Bank or Card Issuer Investigation
Your bank or other debit card issuer will investigate any fraudulent activity you report in connection with your card. The time needed to complete an investigation can vary, but it may be one or two days.
The problem for cardholders is that their funds are tied up while the investigation is under way. That means all or most of your cash could be inaccessible during the investigation if you don't have another checking or savings account to use. Banks refund money to customers' debit card accounts if they determine funds were taken fraudulently.
Read More: What Steps do Banks Take in Debit Card Fraud
Bank Account Closure
Your bank also will close your debit card account if it's determined that funds were stolen. You must be issued a new account number, along with a new card. This could create additional cash-flow problems, especially if your debit card is linked to a checking account used to pay your bills. Make other arrangements to pay bills if all your available cash is tied up in the account that was a target of fraud.
Preventing Future Fraud
The Federal Trade Commission says to examine your bank statements each month as soon as they're issued to detect potential debit card fraud. You should also monitor your account activity frequently before receiving bank statements, especially if you do any banking online. Regularly check your balances, as well as any transactions that are posted to the account, to ensure you authorized them.
Some thieves use equipment to capture debit card information after people use ATMs. Consider using ATMs at banks instead of at convenience stores and gas stations to avoid such scams. Surveillance cameras and customer traffic make bank ATMs less attractive to thieves looking to steal debit card information.
Debit cardholders can also sign up for mobile banking, which allows them to set up fraud alerts. Opting for paperless billing is another way to prevent fraud, as a thief won't be able to get their hands on your monthly banks statement.
Read More: Mobile Banking Regulations
- DFCU Financial: Debit Card Disputes and Fraud
- Federal Trade Commission: Lost or Stolen Credit, ATM, and Debit Cards
- FTC Consumer Information. "Lost or Stolen Credit, ATM, and Debit Cards." Accessed April 27, 2020.
- Visa. "Visa's Zero Liability Policy - Lets You Shop With Confidence." Accessed April 27, 2020.
- FTC Consumer Information. "Disputing Credit Card Charges." Accessed April 27, 2020.
- FDIC. "Supplement I to Part 1005—Official Interpretations." Accessed April 27, 2020.
- FBI. "Internet Fraud." Accessed April 27, 2020.
- FBI. "Skimming." Accessed April 27, 2020.
- FBI. "Identity Theft." Accessed April 27, 2020.
- PayPal. "Security for Buyers." Accessed April 27, 2020.
- FTC Consumer Information. "What to Know About the New Credit and Debit Chip Cards." Accessed April 27, 2020.
- Consumer.gov. "Prepaid Cards: What It Is." Accessed April 27, 2020.
Frances Burks has more than 15 years experience in writing positions, including work as a news analyst for executive briefings and as an Associated Press journalist. Burks has banking and business development experience, and she has written numerous articles on consumer issues and home improvement. Burks holds a bachelor's degree in political science from the University of Michigan.