Debit Cards and Identity Theft: Are You at Risk?

An increasing number of people are keeping track of their personal finances and control spending by using debit cards instead of credit cards when buying gas, groceries, and other daily expenses. Debit cards, or check cards, prevent people from overdrawing their checking or savings account. This is fairly smart money management in theory and in practice. However, as with credit cards, using a debit card carries some risks, and the rise in debit card use has led to a rise in debit card identity theft.

Victims of debit card identity theft often wonder how a thief gained access to their Personal Identification Number (PIN), which is the key to using a debit card to commit fraud. These are some of the more effective ways that thieves obtain debit card PINs:

• Stolen purses and wallets
  Sometimes, a victim will make it easy for a thief to commit debit card identity theft by writing a PIN down on a piece of paper and storing it in his or her billfold. If a purse or wallet is lost or stolen, the thief has all the necessarily information to begin stealing from the victim and merchants alike. To prevent this from happening to you, memorize your PINs — and never write them down.
• Skimmers
  Every time you use a credit or debit card, a device reads the information stored on the magnetic strip on the back of the card. Thieves use that same technology to create "skimmers" that do the same thing. Skimmers can easily fit in the palm of a hand, and it only takes a moment for the device to skim and store your name and other account information. When you hand your debit card to another person, make sure to keep a sharp eye on it at all times, and be wary of any cashier who "drops" your debit card behind the counter for a moment.
• Cameras installed at ATMs
  Automated Teller Machines make it easy for you to withdraw cash whenever you need it. However, the ubiquity of ATMs, combined with camera technology, can make it easy for thieves to install cameras at ATMs that can read numbers on a debit card and record the choices your fingers make as you enter your PIN. When entering your PIN into an ATM, be aware of your surroundings, and carefully cover the keypad.
• Direct observation
  Identity thieves love lines at ATMs; they can surreptitiously watch people type their PINs into the keypad. Often, they work with an accomplice who robs the victim, and, with the PIN, they can access funds in the account in minutes. When using an ATM, again, be aware of your surroundings. If the next person in line is a little too close for comfort, ask for some space before shielding the keypad and entering your PIN, or simply postpone your transaction and move to the back of the line.

Unlike credit cards, which provide some protection to account holders, victims of debit card identity theft can lose a lot more if they fail to notice the theft and act swiftly. The Electronic Fund Transfer Act limits a debit cardholder's liability to $50 if he or she notifies the bank in the first two business days after the card (or information stored on it) is lost or stolen. After two business, the victim can be liable for up to $500 in losses, and if he or she waits 60 days or more to report the loss, the victim might be liable for the entire amount stolen from the account.