What is debit card fraud?

A man with a concerned expression holds his debit card and uses his smartphone to learn about how to protect yourself from debit card fraud.Image: A man with a concerned expression holds his debit card and uses his smartphone to learn about how to protect yourself from debit card fraud.

In a Nutshell

Debit cards are a common payment method, but they offer fewer protections than credit cards do if your information is stolen. If your debit card is lost or stolen, you need to act fast to protect your money.
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If you’re the victim of debit card fraud, you’ll want to take action right away to avoid losing your money.

Unfortunately, debit card fraud is relatively common. A 2022 report on payment fraud by Mercator, a consultant to the payments industry, found that 39% of debit card users experienced fraudulent activity in the past 12 months. Debit card fraud occurs whenever someone uses your debit card number or personal identification number (PIN) to make unauthorized purchases or withdrawals with your account.

Debit cards are the most commonly used payment method, edging out credit cards, cash and mobile apps. It’s easy to see the appeal — debit cards allow you to pay for transactions quickly and easily online or in person, and you don’t need to carry cash. And because debit cards deduct the money from your checking account, you don’t run the risk of racking up debt.

In this article, we’ll go over how debit card fraud happens, who’s responsible if it happens and what to do if you suspect your debit card has been compromised.

How does debit card fraud happen?

You dropped your debit card on the bus ride home, or perhaps your favorite retailer was hacked. Whatever the case may be, debit card fraud can happen to anyone.

Thieves can use your physical card or your debit card number and PIN to purchase things online or transfer money out of your checking account. They can get access to that information in several ways:

  • Stolen or lost cards – A stolen or lost debit card involves the physical card leaving your possession, whether you lose it while out shopping or someone steals your wallet with your card in it.
  • Hacking — Hackers look for weaknesses in companies’ securities systems and install malicious software to get access to customer debit and credit card information.
  • Skimming — Skimming is when criminals install illegal devices at ATMs, gas pumps and other point-of-sale terminals that record debit card numbers and PINs.
  • Spoofing and phishing — These are practices where thieves imitate a trusted source, such as a family member or company, with fake emails or websites. They try to get you to download software, give them your debit card number or send money.
  • Spying — Criminals will entice you to download spyware or malware with compelling stories about celebrities or software. When you click on the link, spyware or malware is installed on your computer that can monitor your computer use and even record your keystrokes, giving thieves your bank and debit card details.

Are banks responsible for debit card fraud?

If your debit card information is compromised and unauthorized transactions are made, you may be wondering if you’re responsible for covering those purchases. Your financial responsibility and the bank’s obligation depends on how quickly you report a lost or stolen debit card.

Under federal law, there are protections that limit your losses. But those protections only apply if you act in a timely manner. Here’s what happens in different scenarios if your debit card is lost, stolen or compromised:

  • Your account information is used, but your debit card hasn’t been lost or stolen: You aren’t responsible for unauthorized transactions as long as you report the problem within 60 days after your bank statement is sent to you.
  • Your card is lost or stolen, but no unauthorized transactions have occurred: If you report the lost or stolen debit card before any transactions occur, you aren’t responsible for future losses.
  • You report a lost or stolen card within two business days after its disappearance: The maximum amount you can be responsible for is $50.
  • You report a lost or stolen card more than two days after learning about the problem, but within 60 calendar days after your statement is sent to you: The maximum amount you can be responsible for is $500.
  • You report a lost or stolen card more than 60 days after your statement is sent to you: You’re responsible for all unauthorized transactions and fraudulent activity to your account.

What to do if you suspect debit card fraud

It’s a good idea to review activity on your bank accounts on a regular basis. If you find fraudulent transactions or withdrawals on your account — or realize you lost your debit card — contact your bank right away. Banks and credit unions usually have fraud alert departments that are available 24/7, so you don’t have to wait to report a lost or stolen card.

The bank will investigate the charges, generally within 10 business days. If the transactions are verified as unauthorized, the money is usually refunded to you within three business days.

After you report a compromised debit card, the bank may close your checking account and issue you a new debit card to use going forward.

Can I get my money back if someone used my card?

If you report debit card fraud quickly — within two business days of realizing your information is compromised — your losses are limited to a maximum of $50.  But if you wait longer than that, you may be responsible for some or all of the charges.

Report a lost or stolen card or compromised bank account information as soon as possible to get the best chance of protecting your account and bank balance.

What’s next?

Unfortunately, debit card fraud does happen, but there are ways to protect yourself:

  • Sign up for multi-factor authentication — With multi-factor authentication, banks require two or more credentials to log into your account. For example, it may ask for your PIN and a code sent to your phone.
  • Use a credit card — Compared to debit cards, credit cards offer more consumer protections if your information is compromised.
  • Sign up for security alerts — Many banks offer fraud alerts and will send notifications to your email or phone if suspicious activity occurs on your account.
  • Monitor your accounts — While security alerts are helpful, it’s wise to review your own accounts on a regular basis to see if there are any transactions you don’t recognize.
  • Inspect card readers or ATMs for skimmers — When using an ATM or card reader, look for damage to the terminal, such as cracks or loose pieces. If there are any issues, don’t use the device.

About the author: Kat Tretina is a personal finance writer with a master’s degree in communication studies from West Chester University of Pennsylvania. Obsessed with her many side hustles, she focuses on helping people pay down their … Read more.