While paying with plastic is nothing new, the good old credit card is slowly being replaced with the swanky, and interest free, debit card, its nearly identical cousin. A good thing about debit cards is that there is no signature required, and the money comes out of your bank account directly. This is especially good if you happen to be an identity thief. If you have that plastic card and the personal identification number, no one questions who you are, especially not a faceless ATM. Indeed, identity theft is easy with debit cards.
If you’re a consumer this obviously doesn’t sound good. And that is not the only problem with debit cards. There is also the issue of liability. With a good credit card, you can contest a charge you didn’t make, and if the credit card company sides with you, no harm comes to your bank account. However, with a debit card, you can be held liable for some of the funds, even if you’re not the one who spent them.
According to Identity Theft Expert Robert Sicilliano, a debit card user only has two days to let his or her financial institution know that his card has been compromised before he has to accept a $500 liability. If the person does not dispute the fraudulent transaction within 60 days, he could be held responsible for the entire balance.
So why the difference? Two reasons. First of all, the Federal Trade Commission rules regarding credit cards and debit cards are different. Secondly, when you use your debit card, the money leaves your bank account almost immediately. When you use your credit card you are essentially borrowing money that you won’t have to pay back until later. Since the money leaves right away, it can be difficult to get it back.
The top ways that identity thieves get a hold of debit card numbers are:
*Physically stealing a person’s debit card, or the entire wallet that contains it
*Grabbing it out of the mailbox when it is delivered
*Looking over a person’s shoulder, also called skimming, when that person is at an ATM or making a purchase
*Hacking into the network of a financial institution and looking through the records stored there
The tops ways to stop them from getting your debit card number are:
*Being careful how you handle your purse or wallet; never leaving it unattended
*Having your financial institution deliver new cards to a secure mailbox or picking them up in person
*Making sure no one is watching before typing in your personal identification number
*Using an identity theft protection service to keep your finances safe when something happens that is out of your control
Victims of identity theft lose, on average, $1,800 to $14,000. Could you imagine your bank account taking that huge of a hit in a short period of time? Even if you get it back, that’s a lot of hassle to deal with and you may not have cash on hand when you need it. It’s better to protect yourself so you don’t have to worry about it. An identity theft protection service can help you in that regard. And if you catch someone looking at your personal identification number, change it. Your financial institution will be happy to assist you. Identity theft has a bad effect on them too.