What it is, how it happens and how to report it

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  • Debit card fraud can happen through card skimming or when someone steals your physical card.
  • Debit cards don’t offer as much protection as credit cards and you can lose money.
  • To reduce risk, check your bank statements frequently and avoid using your card in certain places.

A debit card can be a useful tool for accessing money in your bank account, but you need to know where and when you use it. If you are a victim of debit card fraud, you could be liable for significant fraud losses if you don’t report it promptly to your financial institution.

Here’s what you need to know about debit card fraud, so you can use it safely and minimize risk.

How Debit Card Fraud Happens

Debit card fraud occurs when an unauthorized person uses your card without your permission.

A criminal can more easily access your card information if your debit card is lost or stolen. However, they can also access your debit card information through a process called card skimming.

Card skimming can happen anywhere – a store, restaurant or entertainment venue. People will use devices to capture card information, which they can then use to clone a card or make online purchases.

Is debit card fraud common?

In 2021, the FTC Consumer Sentinel Network received nearly 70,000 fraud reports where a debit card was used as a payment method by fraudsters. This resulted in a total loss of over $140 million for consumers.

“Debit card fraud, unfortunately, is all too common. Millions of consumers are affected by it every year. Most analysts who monitor this have noted that there is a very significant increase in card fraud overall, including debit card fraud during the pandemic,” says John Breyault, National Consumer League vice president for public policy, telecommunications and fraud.

Are debit cards protected against fraud?

Your debit card agreement will set specific terms for fraud protection, but generally financial institutions refer to the Electronic Funds Transfers Act, also known as Regulation E. The Electronic Funds Transfers Act funds describes debit card protections for consumers.

If your debit card is lost or stolen, timeliness will be an important factor in determining how much money you may be liable for if lost due to fraud. There are three main circumstances covered by law, which depend on when you notify your bank. Here is a brief overview of how the law will protect you as a consumer:

  • Circumstance 1 (maximum loss of $50): You may be liable for up to $50 in fraud losses if you notify your financial institution within two business days of realizing the fraud.
  • Circumstance 2 (maximum loss of $500): If you notify your financial institution after two business days have passed but before 60 business days have passed, you could be liable for up to $500 in fraud losses.
  • Circumstance 3 (unlimited maximum loss): Your bank is not required by law to reimburse you for fraud losses that occur after 60 business days. You will also still be liable for up to $500 in fraud losses for unauthorized transactions that occurred within the first 60 days.

To quickly identify debit card fraud, Breyault recommends checking bank statements at least once a week to see if there’s any unusual activity on your account. By doing so, you can minimize the risk and prevent the unauthorized person from making further debit card transactions.

How to report debit card fraud

Call your bank immediately and ideally within two business days. The Office of the Comptroller also has additional resources for reporting and investigating fraud.

Your financial institution will investigate. Funds in your account linked to fraudulent transactions will be frozen while the bank investigates. The investigation can take from a few days to a few weeks, however, national financial institutions generally conduct investigations more quickly than community banks.

If the bank determines that fraud has taken place, you can once again access these funds. However, be aware that you may not get all your money back.

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