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You may think that credit cards are the payment method most targeted by financial fraudsters, but that’s not true. It’s, in fact, debit cards that fraudsters pursue most — and the number of cases involving them keeps increasing, according to a Federal Reserve survey of financial institutions (1). And the reasons why this may leave you more vulnerable to financial loss may also surprise you.
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When you think of debit card scams, you might imagine people having their debit cards physically stolen or their card numbers and PINs skimmed. But there are other debit card scams on the rise that are even more complex. And, as with other scams, having information on how they work may mean the difference between keeping your finances intact and becoming the next fraud victim.
As the Detroit Free Press recently reported, new debit card scams are popping up and gaining momentum (2). One of the most bizarre ones starts with banking customers being warned that there’s a problem with their account, which is a common theme for financial scams.
Next, victims are told to destroy their debit cards but leave the chip on the front of the card intact for security purposes. The scammers then steal the chips by sending a “bank representative” out to pick up the destroyed cards with the chips intact and use social engineering to get the PIN numbers needed to use the cards. With the chip and the PIN, they can then steal funds from the victim’s bank account.
Of course, debit card fraud isn’t the only thing consumers have to worry about. Check fraud has also been on the rise, increasing 10% in 2024 from the prior year, the Federal Reserve survey also found.
The Independent Community Bankers of America has been working with the U.S. Postal Inspection Service to educate customers on check fraud via handouts at different banking locations.
Financial fraud is a problem in general, although, as a consumer, you may be at risk of greater losses if your debit card or checking account is targeted.
Under the Fair Credit Billing Act, consumers are limited to $50 in losses for fraudulent credit card transactions that are reported within 60 days (3). However, most credit cards offer full protection, meaning if your card is stolen or used by a criminal, you probably won’t lose a dime.
Debit cards don’t typically offer the same protection. When your debit card is stolen or accessed by a criminal, the money comes out of your account immediately.
If you report the fraud within two business days, you’re limited to $50 in losses. If you report the fraud after two days and within 60 days, you’re limited to $500 in losses — not an insignificant amount. Worse yet, if you report the fraud after 60 days, you could lose the entire sum that was stolen from you (4).
With checks, timeframes vary. The law says consumers have a year to report check fraud, but there is some leeway. For example, many banks require notification within 30 days, while others expect to be alerted within 14 days after the bank statement was sent out (5).
As a consumer, it’s important to take steps to protect yourself against debit card and check fraud. That includes knowing about the latest scams, including the one mentioned above.
But that doesn’t mean a criminal won’t try to steal your money another way. Perhaps they could steal a replacement debit card from you in the mail or steal checks you’ve written, altering the payee and cashing them.
One option you could look at for protection is to install a mailbox lock where the incoming mail slot remains accessible while the storage part remains locked to anyone who doesn’t have the key. That could prevent a criminal from getting into your mail while allowing a mail carrier to deliver it.
You can also install a security camera outside your home that covers the area of your mailbox. However, this may only offer limited benefits. If a criminal is going to steal your mail, chances are they’re going to wear enough gear to mask their identity.
For debit cards, other fraud prevention methods include always knowing where your card is, covering the keypad when you enter your PIN, and, when buying things online, making sure you shop on a legitimate, secure site while avoiding public WiFi networks.
In addition, look out for loose components on debit card readers at merchants. That could be an indication that a machine has been tampered with and a skimmer has been installed.
Other tips include monitoring your bank account regularly to check for fraudulent transactions and never responding to an unsolicited call, email or text that appears to be from your bank. If you have a concern, call your bank directly or visit a local branch.
Also, never give out your account or PIN over the phone. The same goes for your Social Security number (or other personal sensitive information as a general rule). Having this information could make it easy for a criminal to steal money from your account, and in some cases, steal your identity.
When it comes to checks, fraud prevention methods include writing checks with permanent markers or having them sent electronically from your bank. With the latter, there’s a record with your bank of the intended payee, so it may be easier to prove that fraud has occurred.
It’s also a good idea to bring checks to a post office and have them mailed out directly rather than leaving them in your mailbox to be picked up by a mail carrier. Delivering checks in person is another secure option.
Online scams are on the rise, with the FBI reporting that in 2024, Americans were scammed out of $16 billion by online fraudsters, a 33% increase over 2023 (6). The same year, the FTC reported that the dollar amount for losses from online scams was projected to grow.
To protect yourself and your loved ones from these online scammers, consider using a scam alert service like Aura.
Aura’s online scam tracker uses AI monitoring to look for unusual transactions, sending alerts for any suspicious or significant activity within minutes. Their U.S.-based fraud experts are available 24/7 to ensure you can find accurate information and resolve the situation quickly.
Aura also offers credit monitoring, identity theft protection and parental controls so you can ensure your children don’t fall prey to these fraudsters. Plus, Aura delivers fraud alerts up to 250 times faster than other services of this kind.
Sign up today to enjoy this extra layer of security when shopping online.
Ultimately, prevention is your best defense, so be proactive in learning about the latest safety measures and how scammers try to circumvent them.
Federal Reserve (1); USA Today/Detroit Free Press (2); Cornell Law School Legal Information Institute (3); Michigan Consumer Protection (4); Time (5); FBI (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.