Reports of debit card fraud have rocked Michaels

[SoCalDem]

By LYNEKA LITTLE
May 13, 2011
http://abcnews.go.com/Business/debit-card-security-top-reasons-concerned/story?id=13591862

Reports of debit card fraud have rocked Michaels, a national chain of arts-and-crafts stores, after the company reported it had discovered tampering with the card-reading equipment at stores in 20 states. The massive security breach put the spotlight on the safety of debit cards, one of the most popular ways in America to spend money. "I don't have a debit card. I believe it's one of the worst financial tools ever given to the American public," says Frank Abagnale, a former fraudster turned security consultant who was the inspiration for the film "Catch Me if You Can."

At Michaels, thieves were able to install skimmers to gain access to debit card information, including personal identification numbers, to recreate debit cards and take money directly from customers' accounts, according to The Wall Street Journal. The thieves allegedly stole money from the bank accounts of victims in increments of $500. Debit cards have grown in popularity. "More consumers now have debit cards than credit cards, and consumers use debit cards more often than cash, credit cards, or checks individually," according to a 2008 Survey on Consumer Payment Choice.

"Most people think using your PIN number is the safest way to pay," says Gerri Detweiler, a personal finance expert at Credit.com. "No one would think inside a reputable store someone could tamper with a debit card." "If they can do it there, where can't they do it?" she asks.

Five years ago, TJ Maxx had a massive security breach: data for 45 million credit card and debit card accounts were stolen. Late last year, thieves targeted ALDI supermarkets in 11 states from Connecticut to Virginia, stealing names, card numbers and PIN codes. Debit card loss has risen from $662 million in 2005 to $788 million in 2008, according to the American Association of Bankers. "The safest form of payment that truly exists on the planet is the credit card," says Abagnale. "I removed 99 percent of the risk because I spend the credit card company's money. If someone looks over my shoulder and gets my number, I have zero liability."

snip

[TwilightGardener]

1. This scares me...I've been nervous about using my debit card

at gas pumps because I'd heard those are very easy to tamper with. Didn't see this coming in reputable chain stores. How did the management not know, I wonder? Is this a crime ring among employees?

[ananda]

2. Oh dear.

I've been in a real debit card comfort zone.

Now I have to rethink. Ugghh.

[blogslut]

3. Oh, gee

What an interesting article that totally demonizes Debit cards and yet paints Credit Cards as the hero.

Credit Cards are as susceptible to fraud as are Debit cards.

[ret5hd]

6. The big difference is YOUR level of liability.

[UTUSN]

7. But my paranoid relative keeps saying credit cards have a $50 limit on liability

while debits can be cleaned out completely.

[JPZenger]

22. Credit Card - no liability after you report it

Yes, credit cards have a $50 liability to the cardholder for fraud, while the debit card has no limit. Also, once you report your credit card as being stolen or lost, you have NO liability for fraud for any subsequent charges

[dkf]

8. Except they can't drain your bank account with a credit card.

With a debit card you find out you are out of money the hard way. At least with a credit card you see it report it then don't pay it. With a debit card you need to report it and wait to be replenished so you can pay your bills.

[blogslut]

10. My money was returned

I was at a convenience store and the cashier neglected to close out the sale before me and I ended up with charges I did not make. I called my Debit card provider. They cancelled my card, sent me a new one and reimbursed me for the purchase I did not make. The only problem I had was getting the convenience store to cop to their mistake.

[ret5hd]

12. That was at your debit card providers discretion.

CC's, on the other hand are limited to charging you $50

[blogslut]

13. Okay

I still think that article is propaganda and I will continue to use a Debit card and will never ever use a credit card.

[ret5hd]

18. OK. Wasn't trying to coerce you into doing anything.

jeesh.

[blogslut]

21. I'm sorry if I made you feel that way.

Perhaps my frustration lies in the fact that I feel that article is terribly slanted and that I despise the consortium of lenders that comprise the thing we call Credit Card companies.

[dkf]

29. I write checks. Or pay cash.

If I use a credit card I pay it off every month

[SoCalDem]

14. google "michael's + debit cards" and choose from HUNDREDS of other articles

perhaps one will be of your liking..

I chose ABC's because I was headed for Michael's today & my husband told me that he had heard this am that Michael's here are removing their debit/credit card machines, and will only accept cash or check..

I never even carry a checkbook anymore, so I was glad to know that I would need some extra cash for my trip there today:)

[blogslut]

15. Don't need to

The tech blogs have been covering skimmers for a couple of years. I'm well aware of the subject. :hi:

[dionysus]

24. i had someone steal my credit card and run up a bunch of crap on it. FWIW the companies fraud

division takes this shit real seriously and i did not have to pay for any of the fraudulent charges.

credit card companies are vampires but i'll give em credit, har har, for that at least.

[proud2BlibKansan]

4. My friend bought a VISA gift card and uses it for shopping

She reloads it periodically. Never uses her debit card anymore.

Sounds like a good idea to me.

[SoCalDem]

17. I wish our bank had the option of a special debit card

attached to our accounts, but where I could "pre-load" a specified amount whenever I wanted to use it....and it would be separate from our other accounts.

I guess I could ask for a debit card attached to a savings account, and then transfer funds to it, but I think unless you hold a lot of money in those accounts, they charge a service fee these days..

[proud2BlibKansan]

19. You can buy these gift cards just about everywhere

I don't think they are very expensive.

[SoCalDem]

20. don't they expire or have charges attached to them.. I have seen them

but have only bought the ones for restaurants to give as gifts..

I guess I'll just start using my Discover card more.

[proud2BlibKansan]

28. I'll find out.

I'm going to get one.

[dkf]

5. I refuse to use a debit card even though they charge me $1 /month for an ATM card.

Debit cards have the extra risk of yahoos draining your account before you know about it.

[Shandris]

9. This article is FUD and heavily slanted.

Of course you're supposed to be afraid of debit cards. Why, they don't have 21% interest!

Most Debit Cards from reputable banks have some kind of liability limit in addition to a withdrawal limit that auto-trips (please notice qualifier 'most') and refuses the transaction until identity is verified. The rules for handling a debit card are no different than a stores (particularly in the case where the card can double as a credit card; these require a signature on the back and so forth that are ~legally~ supposed to be checked before the card is honored) rules of handling credit cards. Even sleazy banks offer a small-fee insurance against identity theft in most cases.

The pre-loaded card may be an option, but I haven't personally taken the time to read the fine print on it so I can't say for sure. For shopping online, Paypal and a debit card have served me quite well.

Look at the organization name of the final statement. "The safest form of payment that truly exists on the planet is the credit card," says Abagnale. "I removed 99 percent of the risk because I spend the credit card company's money. If someone looks over my shoulder and gets my number, I have zero liability." -- American Association of Bankers.

[Fuddnik]

16. In this case he's right.

Banks make a ton of money on swipe fees. Fees they charge merchants for accepting debit or credit card transactions.

Last year, I got a call from HSBC on a Friday night about my Union Plus credit card. They asked if I made several thousand dollars in purchases in PA. (I'm in Florida). I said no, and they immediately canceled the card, and sent me a new one.

They said the card had been swiped at several terminals, meaning someone counterfeited it from a scanner. Probably at a gas station, because that's about all I use that card for. Other than electronically signing a statement that the charges were fraudulent, my liability was ZERO. Had it been a debit card, my account would have been drained, and I would have been at the mercy of Wells Fargo to reimburse me. Which they're entitled NOT to do.

Even the protection on checks don't apply to debit cards.

I never use a debit card, mainly because merchants hate them.

[Fire1]

11. I still say the safest form of payment is cold hard CASH. n/t

[Shagbark Hickory]

23. Until you get robbed, lose it or have dispute with the merchant who screws you over.

There's many benefits to using a credit card. Debit cards, not so much.
Cash... I can only think of one, when you run out, you're done spending. Of course, you're also done eating.

[Fire1]

25. That's why it's always good to stick with a budget. That way

even though you may "run out," you can still eat and have a roof over your head and most importantly, you don't owe anybody "interest."

[Shagbark Hickory]

26. You don't have to pay interest if you pay your bill every month. Not only that, they'll even pay you

Some cards, like the capital one card I have pays 2% cash back on groceries and gas and 1% on everything else and yes, you can apply it directly as a credit on your bill.

The only time one would pay interest is if they didn't pay their balance in full. But since you're using a budget and are accustomed to not spending more than you have, you'd be in great shape.

What's in your wallet?

[TransitJohn]

27. We really should enter the 20th Century and switch to Chip & PIN

I mean, really.