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The Revealing Truth About the Monumental Costs of Rising Debit Card Fraud  

Stuart R. Crawford 532 Views
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Learn why the rate of debit card theft is climbing at a serious rate, how thieves use technology to commit fraud, and where your data are most at risk  

Debit card fraud is a disturbingly more common, victimizing consumers and, if the cards are issued for business purposes, companies. The costs to card users and their employers is significant.

Debit cards are a smart and convenient way to conduct business transactions in an easy and clear format. However, the ubiquity of debit card usage has made them a more popular way to steal identities and dollars.

According to Holden Watne, a Los Angeles IT services consultant with Generation IX, the number of identity fraud victims increased by 8 percent that year to 16.7 million U.S. consumers and stole $16.8 billion. The majority of that theft is due to debit card fraud.

Why Is Debit Card Use On the Rise?

Technology is one of the main reasons that debit card use is increasing. Certainly, thieves can gain access to your cards in low-tech ways, such as stealing wallets and purses. Stolen mail is another way criminals gain access to debit card information.

But increasingly it’s sophisticated technological tools that drive debit card theft. Among the ways debit cards are stolen include:

  • Skimming Devices. Portable skimmers can grab your debit card info in seconds, run it through a reader, and have all your account details. There are three main types of skimmers:
    • Portable. Hand-held devices are used to “borrow” your card to gain the data.
    • Internal. Enterprising criminals can put these skimmers inside other devices, such as gas pump card readers. The internal skimmers capture the data transmitted and use it to gain access.
    • Overlaid. These skimmers are placed on top of existing readers and are often paired with video cameras or PIN-pad overlays to capture PINs or passwords.
  • Hijacked Terminals. Hackers can gain debit card info by hijacking the operating system on unsecured or poorly updated ATMs.
  • Ghost Machines. Make sure that ATM you find in a public place seems legit. Thieves have placed fake terminals in locations where unsuspecting people enter all the key information and then receive error messages.
  • Data Breaches and Purchased Data. When you give your card information to a merchant, you’re entrusting them to keep your information protected. Data breaches that expose your financial information are devastating for all involved and can end up with your debit card information available to purchase by thieves.

Why are Debit Cards So Susceptible to Fraud?

Hackers know that it’s more difficult to resolve debit card fraud. Debit cards are tied directly to a checking or a savings account and a thief can quickly deplete your funds. It can take longer to replenish your funds and with fewer federal protections, you may not get all of your cashback.

Credit card fraud, while seemingly very similar, is a very different type of crime. Credit cards have more federal legal protections and fraudulent use can be corrected quickly. The issuer can cancel the stolen or compromised card quickly and refund you for any purchases made by the thieves.

Where Should Debit Card Users Be Cautious?

There are some places where it’s best to be highly cautious in using debit cards. Outdoor ATMs, gas stations, bars, restaurants and online stores are among the most susceptible.

Whether it’s your personal use or your employees using business debit cards, you want to be sure that you are keeping your money and data secure. A proven managed services provider can help assess your security procedures to ensure you are fully protected.