Banks don't want debit card fraud on your account any more than you do. Reputable banks with strong anti-fraud programs constantly communicate with customers to prevent, detect and correct fraud. Even if your bank has a stellar anti-fraud program, you should still stay vigilant with your debit card. It's the consumer's responsibility to report lost cards, missing cards and any suspicious account activity.
Bank and Consumer Liability
Banks have just as much incentive as you do to keep your money safe; they're usually the ones that have to foot the fraudulent bill. Under the Electronic Fund Transfer Act, consumers have limited-to-zero liability for fraudulent purchases. According to the act, consumers have zero financial liability if they report the card lost or stolen before fraud occurs and up to $50 liability if they report it within two business days after losing the card. You could have $500 liability if you report it between two and 60 days, and technically you're fully liable if you don't report the fraud within 60 days of your bank statement. However, some states maintain a $50 cap on unauthorized charges, and many banks voluntarily offer a $50 maximum or $0 liability cap.
Banks take steps to prevent debit card fraud before it ever occurs. Fraudsters could make unauthorized charges on your debit card by swiping it from your mailbox before it ever gets to you. However, criminals need both the physical card and the default PIN to activate a card; one without the other is useless. To deter fraudulent activation, banks send the physical card and the PIN in different envelopes at different time intervals. This means it's less likely a thief will be able to obtain both pieces of the puzzle.
Banks constantly monitor your debit card purchases to detect unusual activity. If you make a purchase out of state, out of country, in an unusual amount or at an unusual location, they may flag your account and temporarily suspend your card-purchasing ability. If this happens, you'll receive a phone call or email from a bank representative regarding potential fraud on your account. If you verify that the purchases are legitimate, they'll remove any holds from your account. If it is fraud, they'll immediately deactivate the card and issue you a new one with a new number.
If a fraudster does get a hold of your debit card, bank-imposed spending limits can mitigate the damage. Banks usually set a maximum daily limit on the funds you can withdraw and the purchases you can make. If you or your bank can catch the fraud within 24 hours, these limits mean you'll only have hundreds removed from your account rather than thousands. The limits do decrease your personal spending flexibility. To make up for this, you can usually request a temporary limit increase if you know you're going to need to make a big purchase.
- Bank of America: How to Get the Most From Your Bank's Anti-Fraud Programs
- Flanagan State Bank: Lost or Stolen Debit Card?
- Nolo: Your Liability for Unauthorized Credit and Debit Card Charges
- Federal Trade Commission. "Lost or Stolen Credit, ATM, and Debit Cards." Accessed Oct. 15, 2020.
- Consumer Financial Protection Bureau. "How Do I Get My Money Back After I Discovered an Unauthorized Transaction or Money Missing From My Bank Account?" Accessed Oct. 15, 2020.
Based in San Diego, Calif., Madison Garcia is a writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.