Debit card fraud 101: Are you liable?
Debit and credit cards speed purchases and provide a level of protection from theft that cash can’t offer. And if someone uses your card fraudulently, you may be inconvenienced, but you won’t be held responsible, right? Well, it depends. Fraudulent charges involving debit cards are treated differently from those using credit cards. Depending on how quickly you report the bogus transactions, you might be liable for more than you expect.
Understanding how debit card fraud works can help limit your losses if you become a victim.
Key Points
- Debit card fraud isn’t as common as credit card fraud, but it’s still on the rise.
- You’re more likely to be liable for fraudulent purchases made with a debit card.
- Review your accounts often so you can catch debit card fraud quickly.
Overview of debit card fraud
The Federal Trade Commission (FTC) considers debit card fraud a type of bank fraud, lumping it in with electronic funds transfer (EFT) and automated clearing house (ACH) service fraud. In 2021, debit card fraud totaled about $140 million. Additionally, from 2021 to 2022, bank fraud—which includes debit card fraud—increased by 12%.
Examples of debit card fraud include:
- A fraudster using a lost or stolen debit card to make online or brick-and-mortar store purchases without a PIN.
- Data breaches can expose your debit card numbers (and even PINs) to the dark web, where counterfeiters can exploit them to make purchases.
- Skimming devices (see below) installed on ATMs or gas pumps can capture your account information and PIN. This information can be used to create dummy cards that can be used for purchases or to make withdrawals from your account at an ATM.
How PIN stealing (“skimming”) works
PIN stealing, or skimming, is straightforward. Fraudsters create a card reader that looks similar to one you’d see on a gas pump or at an ATM. They might also create a connected PIN pad or use a small camera to capture your PIN as you enter it. The lookalike card reader and PIN pad are then placed over real ones.
With a skimmer, your card will pass through the fraudulent reader to the real one. Something might feel “off,” but because you are able to complete your transaction, you may not realize your debit card has been compromised.
How to recognize a card skimmer
Look at card readers carefully. Legitimate card readers are often set back a bit, while card skimmers appear bulkier or may stick out. You might also see some tape or glue residue. Additionally, you might have a hard time getting your card all the way into the reader. If there are several reader errors, that could indicate the skimmer is interfering with your ability to insert your debit card.
Debit card fraud: What you’re liable for
Knowing how debit card fraud happens is important, but so is being aware of how much you’re liable for if it should happen to you. Your liability for credit card fraud is limited to $50. But your responsibility for fraudulent transactions with a debit card mostly depends on how long it takes you to report an issue to your bank or credit union.
| Reporting scenario | Your liability |
|---|---|
| Your card is lost or stolen, and you report it before anyone uses it. | No liability. |
| Your card is lost or stolen, and someone uses it before you report it. | Your responsibility depends on the speed of reporting: $50 if you report within two business days of finding out; $500 if you report after two business days have passed, but before 60 calendar days have passed since the statement that contains the charges. |
| Your card is still in your possession, but someone uses your account number. | Any fraudulent transactions you didn’t authorize aren’t your responsibility as long as you report the loss within 60 calendar days from your statement date. |
| Someone uses your debit card or account number to complete transactions, but you don’t report until 60 calendar days have passed since your statement. | All the money you lose as a result of fraudulent activity, including debit card purchases, online purchases, and account withdrawals, is your responsibility. |
Debit card fraud and access to your money
One of the biggest issues with debit card fraud is that your money is deducted from your bank account when it happens. Depending on how much is spent or withdrawn, you might not have enough for your bills or automatic transfers, exposing you to possible fees.
But the good news is that there are some requirements for the bank or credit union as it investigates your fraud claim:
- The financial institution must investigate the report within 10 business days (or 20 business days if the account is new).
- Once the problem has been identified, the financial institution must correct the issue within one business day.
- If the financial institution thinks it will take longer to investigate the fraud, it must issue a credit to cover the amount of the transaction (minus up to $50).
- Note that you might need to provide written information to get your temporary credit if the investigation takes too long. (Telephone reporting might not be enough.)
Depending on the nature of the fraud, a bank or credit union might take 45 to 90 days to resolve the issue.
How to report debit card fraud
If you notice a fraudulent transaction on your debit card account, report it as soon as possible to your bank. Banks (and credit unions) often have dedicated fraud phone numbers. Representatives staffing those lines can help you review recent transactions to determine which ones should be flagged.
Be sure to provide as much information as possible. Take notes during and after the call, including the date, time, and the representative you spoke with. Ask how you can follow up on your report in writing, then email and/or send it by certified mail to the address provided.
Next, consider filing a report with law enforcement. The perpetrator might not get caught, but having a police report can bolster your case if the bank takes too long to investigate—or if the fraud has other negative consequences for your finances or credit score. You can also report fraud to the FTC through its identity theft portal.
The bottom line
Debit card fraud is a form of identity theft and is a real threat. Although you can’t always avoid it, reporting the fraud as quickly as possible is important to limit your liability. Check your accounts regularly to catch suspicious activity, and call your financial institution immediately if there’s a problem. Keep your debit cards in a safe place and don’t give out your account information. Also, pay close attention to ATMs and other card readers to reduce the chance of falling victim to card skimmers.