Dealing With Debit Cards

What you should know:

Your liability when money is stolen from your bank account, with a debit or ATM card for instance, all depends on how quickly you report the theft, so you’ve got to act fast…really fast. If you report it within 2 days, you’ll only lose $50. If it takes more than 2 days, but under 60, you can lose up to $500, and if it takes you more than 60 days to report the theft, you can lose all the money you had in your account. (Some debit card companies voluntarily cap your liability at $50, same as a credit card. Check with your financial institution to find out their policy.)

What you should do:

Take all the same steps you would take if this were a credit card fraud. In this case, because timing is everything, it’s even more important to send the letter certified mail, return receipt requested.

What they have to do:

You had to act fast, so it’s only fair that they do too. Your financial institution has ten days to investigate your case, three days to notify you of the result, and one day to fix the error once they’ve finished investigating. If it takes longer than that, they must return the money to your account while they investigate, for up to 45 days.

They’ll want that money back if they find out you really did spend it, but they have to notify you in writing first.

Practice Safe Internet Shopping

Ahh, Internet shopping. No lines, no crowded parking lot…you don’t even have to put on a shirt. And neither does an identity thief before he hacks into a web merchant’s database and steals your credit card number.

Online shopping isn’t quite so convenient if it results in identity theft, so before you and your credit card get too cozy over there, check out these rules for shopping smart.

• Shop from secure sites, which will encrypt your order info—including your credit card number—before sending it to a merchant. To make sure your connection is secure, look for “https://” at the beginning of the URL in the address bar (it’s the “s” that’s important). Also check for a little picture of a padlock or an unbroken key in the bottom right hand corner of your browser.
• Read privacy policies. Secure ordering only protects your information en route. A privacy policy should tell you if the company is going to store and use your information safely once it arrives.
• Shop at sites you know. If you aren’t sure about a site, do a little research before you divulge your digits.
• Look for privacy seals—like BBBOnline, TRUSTe, or VeriSign—on the sites where you shop. These colorful little logos, usually located at the bottom of a homepage, certify that the company adheres to certain privacy and security guidelines. Click on the seal to make sure it’s genuine, and to find out exactly what its placement on the site means.
• Shop with a credit card—not a debit card. If a thief intercepts your credit card number and runs up charges, federal law limits your liability to $50 per card. If the same thing happens with your debit card, you can lose $500 or more.
• Keep detailed records of your online purchases in case anything goes wrong.
• Log off after using public Internet terminals, and, if possible, save your shopping for your home computer.
• Use special software to wipe your hard drive clean before chucking your old computer.

Are Debit Cards Safe?

Answer: The Jury Is Still Out.

The problem is that although your credit card number and your debit card number are both pretty easy to steal, the results can be quite different. With credit card fraud, the thief steals the bank’s money, and your job is to prove you don’t really owe it.

With debit card fraud, the thief steals your money, and you have to convince the bank to put it back into your account. Guess which one’s easier? When a thief steals your credit card you’ll never pay more than $50 in fraudulent charges. But when it’s your debit card, it’s possible to lose all the money in your bank account.