If you own one of the nation's 437 million debit cards, watch out. You might get scammed. Experts predict debit card fraud will rise by more than 10 percent this year, according to a recent survey by Actimize, a bank fraud consultant. That's because crooks are getting smarter and debit cards are becoming more popular.
And when it comes to card chicanery, not all plastic is equal."Debit card scams are a nightmare," warns Ed Mierzwinski, consumerprogram director for the U.S. Public Interest Research Group (PIRG) in Washington, D.C. "You don't get the same consumer protection as with a credit card."
By federal law, your liability for unauthorized transactions with acredit card tops out at $50. But that $50 limit applies to a debit cardonly if you notify the bank within two business days after the theftoccurs. Otherwise, you could be on the hook for up to $500. If you failto report the bogus charges within 60 days after your bank statement ismailed, your liability is unlimited.
Debit cards now account for almost 60 percent of purchases madewith plastic, and 90 percent of households with bank accounts have alinked debit card. The allure is obvious: With a tap, swipe, orsignature, you can pay for everything from postage stamps to a fancymeal and have the money automatically withdrawn from your bank account.The cards are equally alluring to scammers, who enjoy the ability tosuck money from the accounts of unsuspecting debit card customers. Andonce they start robbing you, it can be nearly impossible to get them tostop. "Some people have had to close their accounts to stop beingbilled," says Alison Southwick of the Better Business Bureauheadquarters in Arlington, Va. "It's a bit of a nuclear option, but forsome, that's the only way that worked."
Here's the down and dirty on the three most common ways debit card information is getting swiped and how to protect yourself:
1. Pop-Up Ads- Editor's Note: Not to be confused with the Pop-Up PIN Pad!
These pop-up's show up on e-commerce sites after you've made a purchasewith your debit card. The pop-up promises cash-back rewards once youclick "Yes" on the ad. But you may not realize that you're actuallyagreeing to automatically sign up for a company's online membershipservice. And unless you cancel, your card will get charged every month,indefinitely. The scam, which also nails credit card holders, is legalbut slimy. Sen. Jay Rockefeller (D-W.Va.) is investigating this type ofpop-up ad fraud, which generates thousands of mysterious monthlycharges to cardholders.
One New Jersey couple with debit cards connected to their jointchecking account told MoneyWatch.com they recently got scammed for $80in monthly subscription charges to two sites they had never heard of:one for adult content and one for "Internet service." They noticed the$39.97 and $39.95 charges on their statement and called the bank, butwere told they had to either cancel their two cards or file acomplaint. Frustrated, they deciphered the toll-free number for eachhoax (the first nine numbers in the cryptic sequence listed on the bankstatement) and called the companies to demand their money back. Thefirst site refunded the cash. But the second refused, claiming that thecompany had processed the refund; it told the customers to call theirbank to find out why the money had not been released.
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