Debit Card Fraud Growing

Sep 5, 2012 by

credit cardsAs debit cards have grown in popularity, so has debit card fraud. This chart from, based on information from Fair Isaac Corporation (creator of the FICO credit score), shows the three biggest avenues used by debit card crooks, and the growth in each category from 2010 to 2011.

debit card fraud growth chart

“Card-Not-Present” Fraud Now the Crooks’ Top Tool

FICO says that “skimming”—the technique of affixing an electronic device to card swipe machines like ATMs and point-of-sale readers to collect from the card data needed for fraud—is especially on the rise. With the explosion of online retailing, the need for a physical card to commit fraud is long over. (Though crooks also create electronic duplicates—worth money on the street—of your debit or credit card with the information skimmed.) This sort of “card-not-present” fraud is now the most common for both debit and credit cards.

How to Protect Yourself Against Card Fraud

I didn’t find a lot of tips that would be effective against skimming. The usual, tired recommendations to not write your PIN on the card and watch out for “shoulder surfers” when you’re typing your PIN are worthless against an electronic skimming device. I think the reality is, in today’s world, it’s virtually inevitable that each of us will be victimized by card fraud sooner or later. The bad guys are just too clever! But here are a few tips that can help, but not totally prevent, card fraud:

  • Use your debit and credit cards sparingly. Think of every use of your cards as an opportunity for a thief to steal your information.
  • Withdraw cash only at bank teller machines. Third party ATMs may be poorly monitored and less secure than your bank’s machine. Also, what bank is going to hold you responsible if the fraud originated with its own compromised machine? Well, maybe Bank of America, but what real bank?
  • Don’t hand over your card. If you release your card to, say, a waiter who disappears with it for a few minutes then reappears with your bill, you’re inviting fraud. In only a moment the waiter can swipe your card through a separate, crook-supplied card reader that fits in a pocket, in addition to the restaurant’s legitimate card reader. If a restaurant doesn’t have portable card readers you can operate at your table, or if you can’t pay by operating a reader yourself at a central till, find somewhere else to eat. Or, better yet, pay with cash.
  • Sign up for electronic banking alerts. These days many banks will send you a text or email when your debit or credit card is used. This won’t prevent fraud, but you’re more likely to learn about it promptly so you can take action.

Your Tips and Experiences

Have you been victimized by credit or debit card fraud? Were there any financial consequences for you, or just inconvenience? Can you add to the list of tips to help minimize the chance of fraud?

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