Stolen Debit Card? Here's How to Protect Your Money Now
As hackers continue to perfect their craft, credit card fraud continues to be an easy way for crooks to get fast cash.
But there's one kind of fraud that's potentially much more dangerous to your financial well being -- debit card fraud.
Why Debit Card Fraud is Worse than Credit Card Fraud
Credit card fraud is inconvenient, but you can come back from it with some work. You simply notify companies that are automatically debiting from your card, change how you shop online and carry extra cash for the things you'd normally just slide onto your card. If you're traveling, you may have to wait for the bank to deliver a new card to you.
Not to mention your credit card is backed by a federal law that limits how much cash you're responsible for if it's stolen. And that counts for a lot.
On the other hand, debit card fraud isn't protected by the law, and it can wreak havoc on your checking account. Make no mistake, losing your debit card can cost you tons more if it's stolen.
John M. Mackey, president of Mackey Client Protection of Missouri LLC, uses his debit cards regularly for fuel and groceries. After swiping the card at a fuel pump one day, he suddenly began to see his account drained as a thief used his stolen number. He reported the loss, but it still cost him because it was a debit card.
"Unfortunately, I could not recover the loss from my bank; reason given is business accounts are not insured like personal accounts," Mackey said.
Mackey said the numbers to his business and personal accounts have been stolen more than once -- at fuel pumps, at grocery store swipe machines and through online purchases. Sometimes he gets the money back; sometimes he doesn't.
Why It's Crucial to Report Your Debit Card Fraud Immediately
Experts warn people not to carry debit cards at all since it's as though you are carrying an open door to your checking account -- they're linked directly to your bank. They give thieves the ability to tap into your account and drain it. And these days, thieves don't have to have your debit card in their hands to steal your account numbers. They can collect your numbers from the Internet or skim them from gas station pumps and restaurants.
When that happens, the timing of your report of theft is critical.
"It hinges on how quickly you report it," said Curtis Arnold, founder of cardratings.com and author of How You Can Profit from Credit Cards. "A lot of times, you don't catch these things right off the bat. That's when it becomes a problem."
How to Protect Your Account After Debit Card Theft
Within 2 Days: According to the Federal Trade Commission (FTC), you must report debit card theft within two days in order to keep liability to $50.
Between 3 And 60 days: If you report the loss after two business days, you could lose up to $500 for an unauthorized transfer.
If just your number is stolen and not your card, you've got 60 days to report it from the time your bank statement (with the fraud) is mailed to you.
After 60 Days: You could lose all the money in your bank account (and the unused portion allowed for overdrafts) if you fail to report the fraud within 60 days of the arrival of the statement with the unauthorized charges.
Stay vigilant and watch your bank statements over the next few months, and talk to your personal banker to learn how to best protect your bank accounts now and into the future.
[Also check out: 7 Ways to Hack Proof Your Online Bank Account]
A simple way to avoid this nightmare is to opt for a credit card and don't carry a balance: "You've got stronger protection if you're a credit card user than you have if you're a debit card user," Arnold said.
"The federal law is stronger for credit cards. And they don't have direct access to a checking account; they can't wipe that out." And you have 60 days to report fraudulent charges with credit cards, as opposed to just a few days with debit cards.