What You Need to Know About Debit Card Fraud

In 2023 alone, over 83,000 reports of fraud by debit card were reported to the American Federal Trade Commission. Worse, those 83,000 reports were responsible for $220 million worth of losses. In fact, there were 30,000 fewer debit card fraud reports than credit card fraud reports, but the losses from debit card fraud nearly equaled the year’s $256 million losses from the credit card fraud. Conclusion: yikes.

While credit card fraud is the number one type of payment card fraud in the US and around the world, it’s high time to also highlight the danger of debit card fraud. Let’s discuss what you need to know about this type of fraud, how it differs from credit card fraud, and—most importantly—what you can do about it.

What is Debit Card Fraud?

Debit card fraud is when someone steals your debit card's information or gains access to your debit card to make unauthorized purchases or withdraw funds without your permission.

While similar to its evil older brother credit card fraud in many ways, it also differs significantly. For one, debit cards pull money directly from your bank account. This means that debit card fraud immediately impacts your available funds, unlike credit card fraud, which steals from the issuer’s credit available to that card.

The?legal protections?for debit cards are also different from those for credit cards. It’s important to note that credit cardholders typically benefit from legal protections that provide them zero liability in the face of fraud. Unfortunately, debit cardholders face a greater financial risk when fraud occurs, as they may be responsible for all losses. Under the Electronic Fund Transfer Act , you must report debit card fraud within just two business days to limit your liability to $50. If the fraud is reported within sixty days, liability can rise to $500, and after sixty days, you can be responsible for the full amount. In cases of credit card fraud, you’re typically only liable for $50, thanks to the?Fair Credit Billing Act , no matter what.

Because of this limited protection, debit card fraud can be much more devastating than credit card fraud—particularly for those who mainly rely on debit cards. 72% of consumers report using debit cards, and consumers under the age of 40 are the most likely users of debit cards. It’s also no surprise that economically disadvantaged individuals are also more likely to use debit cards than credit cards.

In short, debit card fraud often hits harder than credit card fraud because it largely affects those who are already hurting.

Types of Debit Card Fraud

Debit card fraud happens a lot like credit card fraud: a fraudster gets ahold of your card or your card’s information, and then either uses it to make fraudulent purchases or sells the information to other fraudsters for profit.

How do the bad guys get their hands on your card? Unfortunately for all of us, debit card fraud can begin anywhere you use your debit card. Here are some of the tricks to watch out for:

Shoulder Surfing

One of the easiest ways for a thief to obtain card information is by physically taking your card. To acquire the PIN, they might try to observe you entering it at an ATM or payment terminal or try to guess a common code, such as a date of birth.

Skimming

Skimming involves placing a device over a legitimate card reader to capture card information. These devices, called skimmers, are often found at ATMs, gas station pumps, and other card payment terminals. Thieves may also install a small camera or a fake keypad to record you entering your debit card’s PIN. Some criminals even hide skimmers inside ATMs; this makes the skimmers extremely difficult to detect without taking the machine apart. 2023 showed a 96% year-over-year increase in the number of debit cards that were compromised by skimming.

Hijacked terminals

Criminals can take control of a payment terminal (like an ATM) by swapping its operating system with a tampered version. Some ATMs allow remote access and have insecure settings. Attackers can exploit these vulnerabilities. In other cases, criminals steal terminals, alter them, and then put them back in place to masquerade as functioning, trustworthy machines. All the while, however, they’re stealing your debit card’s information. According to the Federal Financial Institutions Examination Council , a recent ATM attack netted over $40 million in fraud from only 12 debit card accounts.

Ghost ATMs and fake fronts

Rather than hijacking or attaching a skimmer to a real machine, criminals may set up completely fake ATMs. These counterfeit devices are placed in high-traffic areas and trick users into thinking the machine is malfunctioning after they’ve entered their card and PIN. However, the fake terminal is actually collecting their debit card data for future use.

Data breaches

Sophisticated hackers target businesses and other entities that store card information, sometimes breaching security systems to access large quantities of debit card data. This data can then be sold en masse or used for fraudulent online shopping sprees.

Phishing Scams

Phishing is a common scam where criminals trick victims into providing their debit card details through fake emails, websites, phone calls... you name it. To get past your defenses, they often pretend to be a trusted authority, like a bank worker, police officer, or government official.

Fighting Debit Card Fraud

We hear you asking: ok, debit card fraud is pretty scary alright. So, how can I protect myself? We’ve got you covered. If you find yourself a victim of debit card fraud, you should follow certain protocols ASAP to minimize your losses.

Report the fraud

Immediately report the fraud to the Consumer Financial Protection Bureau , the Federal Trade Commission , or your country’s relevant agency. You should also file a police report?for additional documentation.

Contact your bank

Contact your bank?or credit union and notify them of the fraudulent charges. Keep records of your conversations and any correspondence.?Remember, you may have only two days to limit your losses, so time is of the essence!

Dispute the transaction

You may need to begin the process of a debit card fraud dispute. Contact your bank or debit card issuer by phone or online to find out how.

You can also take proactive steps to safeguard your debit account from card fraud. These steps include choosing a strong PIN?by avoiding birthdays or other numbers that are easy to guess, monitoring your accounts?frequently for suspicious activity, reporting any discrepancies?as soon as they appear, making sure nobody can see the keypad when you enter your PIN in public, and inspecting public payment terminals for skimmers or red flags before use.

But all these protections only go so far. EVC (Ellipse Verification Code) is a new tool that prevents debit card fraud by transforming the debit card’s static security code into a dynamic security code that changes each time the card is tapped, dipped, or activated with a mobile app. This way, even if your debit card’s data is compromised, it’s worthless—since the security code has already changed by the time the fraudster attempts to use it.

Debit card fraud is a serious concern, particularly for the most vulnerable consumers. What’s more, protections for debit card fraud currently lag behind those for credit card fraud. What does that mean for you? That means that it's crucial to stay informed about the risks of debit card fraud and take steps to protect yourself against its potentially devastating consequences.

Remember: debit card fraud punches down, and it hits where it hurts the most. Ask your card issuer about EVC and get the peace of mind you deserve.