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.
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.
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.
On its website, the U.S. Federal Trade Commission recommends that consumers examine their bank statements each month as soon as they're issued to detect potential debit-card fraud. However, you should 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. A "Consumer Reports" article titled, "Debit Card Skimming Scams," warns that some thieves use equipment to capture debit-card information after people use automatic-teller machines. 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.