Charge It!

In the past week, I've learned a whole lot about debit card fraud. Having someone steal your debit card number and PIN and withdraw $6600 from your checking account will put you through a crash course in debit card fraud.

The main thing I've learned... it is risky to use your debit card for purchases and for ATM withdrawals. Cash and credit cards are much safer. Yes, credit card numbers can be stolen, but most of us have more than one credit card. If our credit card is stolen, that account is closed and you can open a new one. Your money will be returned. But with a debit card, the money is removed directly from your checking account, which banks are not required to return to you. (thankfully our bank did return our money) But if a thief empties your bank account, that can result in bounced checks, freezing of your account, etc. which is much more inconvenient to deal with than one credit card. Try paying online bills and getting cash out of your account when it's frozen. Yeah, that was me last week.

How can thieves steal your debit card number and PIN without having your card? Easy. They can install a skimmer on an ATM that records all of that information. As soon as they have that information, they make a new card and start using it.

For example: Here is a regular ATM.

Here is an ATM where thieves attached a skimmer to record all the data of all cards that are inserted.

And here's another example of a more subtle skimmer...

Thieves can also install hidden cameras that will record you punching in your PIN at the ATM. Here is what looks like a brochure holder. In the second picture, you see the arrow pointing to the hidden camera.


Thieves can also install a key pad above the normal key pad, which will record your PIN number.


And all of that is just for using ATMs. Guess what? We hardly ever use ATMs. But we do use our debit card for lots of retail purchases. When you make a purchase with your debit card, and you punch in your PIN, that information is stored in the retailer's computer. Many merchants incorrectly store them, making PIN stealing as easy as breaking into an office computer, and using a password a careless employee has taped to the side of the screen. Or tech savvy thieves can hack into retailer computers from a separate location altogether. In defense of the retailers, they are using payment software and probably don't know what's being stored in their computers. And of course there are some employees who are in on the debit card fraud.

(thank you, by the way to our bank fraud investigator who sent me all those pictures)

Our bank fraud investigator said that we should stop using our debit cards for purchases. (with the exception of the grocery store and Target, which he believes are still safe places to use your debit card) When you do choose to use your debit card, sign it as a credit card and don't use your PIN.

In our case, the thief stole Marshall's debit card and PIN, not mine. But since I've used my debit card plenty of times as well, I went ahead and had the bank send me a new card, with a new PIN. I know I'll be using the new debit card much more selectively. And for everything else, I'll use cash or credit.

We did report our debit number theft to the LAPD, but if they're "enthusiasm" about our case is any indication... I'm not going to hold my breath that the case will be cracked.

Live and learn.