It was Christmas morning, and my family was gathered around the tree when my daughter Julia’s cell phone rang. The caller ID said MasterCard. Since it was Christmas, Julia figured it couldn’t possibly be someone trying to sell something, so she answered. That’s when she got the bad news.
Over the past week, someone in the Detroit area made a variety of charges using her debit card. How could this be? She was never in Detroit, and her card was safely tucked in her purse in New Hampshire. Apparently, her information was somehow obtained and used to produce a counterfeit card. In other words, the number had been hacked. These suspicious charges were flagged by the card company. They contacted her and put a freeze on her account, but now what?
Unlike a stolen credit card, an ATM or debit card is tied directly to a bank account. For Julia, this meant that her bank account, which had over $1,000 dollars in it to pay her living expenses (including her next month’s rent), now had less than $30 in it.
Most of us use debit cards as a quick and convenient method of paying for daily expenses. Many of my friends use theirs for almost everything and never carry cash. But there are some drawbacks if they are lost or stolen. Depending on the bank, it can take weeks to restore the money, and you may be liable for up to $500 (credit cards are limited to $50).
Here are five things you should know about debit cards and protecting yourself.
- Check your account often. Not just the balance; look at the charges. Some banks allow you to customize alerts on your card, such as purchases over a certain amount, specific online retailers, or if a charge is put though without the card present. Consider setting up these features. Alert your bank immediately if you see suspicious activity.
- Only take out money from your own bank’s ATM and beware of “Hacker Hot Spots.” Gas stations and ATM machines are hotspots for so-called “skimmers,” machines that scammers install to capture your card information. Watch out for ATM parts that look unusual and always cover your hand when typing your PIN in case a camera is watching.
- Don’t use your debit card to pay at businesses you don’t trust. Some experts advise consumers to completely avoid using a debit card. Instead, they recommend applications such as Apple Pay or Google Wallet to pay at the store or online, or use cash or a credit card.
- Have a “Plan B” in case your account is hacked. For example, having an emergency savings account could carry you through until funds can be restored into your debit account.
- Find out what your bank’s policy is when it comes to handling fraud. Ask questions beforehand and call them as soon as you suspect fraud.
Fortunately, Julia’s debit card was through a local bank, so early the next morning she went to a branch where a customer service representative helped her complete the paperwork to dispute the charges. By the end of the following week, most of the funds were restored. In two weeks, she had a new card. She now thinks twice about where and when she uses her card and regularly checks her balance and charges on her account. She also only keeps the money she needs to pay expenses in her account, and makes sure that any extra goes into a separate savings account not tied to her debit card. For Julia, this was one Christmas story that she hopes will not repeat.
If your ATM or Credit Card information is stolen, FTC.gov provides advice on the steps to take, including your rights and responsibilities: http://www.consumer.ftc.gov/articles/0213-lost-or-stolen-credit-atm-and-debit-cards.