Scam of the day – December 19, 2014 – Are you protected when you use your debit card as a credit card?

Regular readers of Scamicide and my books, such as the recent “Identity Theft Alert” are familiar with my regular refrain that you should not use your debit card for anything other than an ATM card and even then you should carefully examine any ATM you are considering using for evidence of tampering that can indicate that the ATM has been tampered with and a skimmer installed on it that will capture your account data when you insert your card.  When you shop with a credit card whether online or in a brick and mortar store, your liability limit for fraudulent purchases made with your card is fifty dollars and most card issuers don’t hold you responsible for any fraudulent charges when you promptly report the fraud.  On the other hand, when you use your debit card, you are making a direct withdrawal from the bank account tied to your card.  If your debit card security is breached such as in a data breach as occurred in the last year at Target, Home Depot and numerous other stores your liability is five hundred dollars if you do not report the fraudulent use within two business days after learning of the breach and if you are not regularly monitoring your bank statements and do not report the fraudulent use for more than sixty days after your bank statement with the fraudulent charges is sent to you, your liability is unlimited.  Potentially, you could lose your entire bank account if you are not careful.  And even if you report fraudulent use of your debit card immediately, your bank account will be frozen and you will lose access to your own bank account while the bank investigates the matter which can be a tremendous inconvenience.

But what about people who use their debit card as a credit card at the register when paying for purchases?

When you present a debit card, you are asked if you want to use it as a debit card or a credit card which might lead some people to think that if they use it as a credit card, they are receiving the legal protections that apply when you use a credit card.  These people could not be more wrong.  Regardless of whether your debit card transaction is processed as a debit purchase with a PIN or as a credit card transaction without a PIN, the money is still processed as  a debit card with the funds being immediately withdrawn from your bank account.  Frankly, the only difference to the consumer is the fees associated with the card use.  Some banks charge you a transaction fee if you use your debit card as a debit card with a PIN for purchases, but charge the retailer a fee when the card is used as a “credit card” purchase.

TIPS

Never, and I mean never, use your debit card for anything other than an ATM card.  Do not use it for purchases either in a store or online.  Make your purchases by credit card only and regularly monitor your credit card account carefully for unauthorized purchases and report them immediately.  Also, pay careful attention to small regular occurring charges that may appear on your credit card statement that you might otherwise overlook due to their small amount.  Some identity thieves count on their victims missing these regular charges that can add up considerably over time to a great amount of lost money for you.