Debit Card Scams: How to Spot, Report & Recover
Consumers must be on the lookout for a few different types of debit card scams, as most of us use our plastic at both the ATM and a merchant’s point of sale. And with both law enforcement techniques and data security measures becoming more and more advanced, financial criminals are forced to become increasingly sophisticated.
As a result, debit card scams now run the gamut from physical robbery and ATM “skimming” to massive spam campaigns and advanced online attacks targeting the payment terminals of large national retailers. But that’s not to say that we consumers are defenseless.
In addition to card network protections and a federal safety net, we have the regulatory powers of the federal government and increasingly secure payment technology on our side. We’ll explain all of that and everything else you need to know about debit card fraud below.
How To Identify & Avoid Debit Card Scams
Scams don’t come up and introduce themselves. They also come in all shapes and sizes. It’s up to us to spot them, hopefully before any real damage can be done. You typically don’t need eagle eyes to do so either, as there are a number of pretty stark warning signs that you can and should be on the lookout for. We’ll break them down in the context of the most common types of scams below.
|Type of Scam||Explanation||What To Do|
|Skimming||The most common form of ATM crime is known as skimming. This technique involves the thief implanting a device within the ATM that captures cardholder information.
It often entails overlaying a fake card reader onto a terminal, placing an entire fake façade over the machine, or even using an entirely bogus ATM.
|If an ATM looks off to you, just walk away.
This issue also underscores the importance of using only trusted ATMs in locations you have visited before. You may also want to avoid freestanding ATMs (those not built into a wall) unless they are inside a store or other location you trust. Such ATMs, it figures, are more accessible for tampering.
|Hacking||Hackers can infiltrate an ATM’s software, compromising the machine in order to capture cardholder data and freely withdraw cash.||It’s hard to determine if a particular ATM has been hacked, but you can minimize your chances of becoming a victim by only using trusted ATMs and keeping abreast of local crime news.
Reviewing monthly bank statements will also ensure that you notice any resulting fraud as quickly as possible.
|Surveillance||Thieves can either try to steal your PIN by peeking over your shoulder or by hacking into surrounding surveillance cameras.||Consider who might be able to see over your shoulder at your ATM of choice, whether they are within eyesight or they have a somehow hidden vantage point.
Also, don’t be afraid to be bashful, using your body to safeguard your PIN entry.
|Spam||Whether with spam email campaigns or more targeted hacking, thieves are capable of using our computers and Web habits against us in order to steal valuable account information.||Make sure your anti-virus software is up to date, change your passwords regularly and avoid clicking on emails from senders you do not know or ads from companies you do not trust.|
|Unusual Requests||Many of us have received emails asking that we wire some long-lost cousin money after he befell some unfortunate incident.
Sometimes, it’s readily obvious that such emails are fake, but they often contain enough accurate information or are masked cleverly enough – with misleading subject lines, for instance – to slip through our defenses.
|The best policy you can have is to report such emails as spam and then immediately delete them as well as clear the contents of your cache folder.
You should also make it a rule to open correspondence only from people you know.
|Eaten ATM Card||We’ve all had a vending machine eat our snack money, and fraudsters often depend on us remembering such instances when an ATM swallows our plastic. This is not just the (un)luck of the draw, however, nor an event that should be overlooked.||As long as the card was not eaten as a result of you inputting the wrong PIN numerous consecutive times, immediately report your card as being lost and closely monitor your bank account for the next few months.|
|Phishy Phone Calls||Scammers often employ a strategy known as phishing, whereby they call victims pretending to be their bank and ultimately try to get the accountholder to reveal private financial information.||Just remember: Your financial institution will never proactively call you to ask for confidential account information.|
|No Refund Policy||While a no refund policy is not 100% correlated with scams, it is a risk on your part and an attribute that a fraudster would indeed have.||Use both the eye test and some Web research to make an educated decision regarding how to handle the seller.
If you’re buying online, you may want to complete the transaction with a service such as PayPal that offers purchase protection.
|Offers Too Good To Be True||Fraudsters often use eye-catching offers, even for mundane items, to lure in victims.
For example, the Federal Trade Commission reports that numerous consumers in Minnesota ran afoul of a scam involving unusually inexpensive exercise equipment and fraudulent MoneyPak gift cards. Such cards have since been discontinued due to their susceptibility to fraud.
|Thoroughly research both the offer and the seller, then use your judgment. Customer reviews are extremely helpful in this regard, as long as you can verify the reviewer is, in fact, a real person.
You should also be wary of sellers who will only accept a certain (or unusual) payment method, such as a specific prepaid card.
|Threats Of Imprisonment||Fraudsters have been known to threaten people with jail time if they do not settle unpaid balances (e.g. back taxes) immediately.
This was one of the most common scams in 2014.
|Do not pay or agree to pay anyone who contacts you out of the blue. Ask them to verify their identity as well as the debt itself.|
How to Report a Debit Card Scam
Consumers who feel they have been scammed or ripped off have a number of really good outlets for their frustrations. For starters, you’ll want to call your card’s issuer to report the scam. This will prevent future spending on your account and trigger an investigation into recent transactions.
In addition, you can report the issue to various federal authorities tasked with maintaining safety and order in the retail and financial markets. The following table has all the contact information you need for official government reporting procedures.
|USA.gov||Posts alerts about recent scams.||1-844-872-4681||Submit A Report|
|Consumer Financial Protection Bureau||Monitors consumer complaints and regulates financial organizations.||1-855-411-2372||Submit A Report|
|Federal Trade Commission||Fields consumer complaints regarding businesses and operates as a consumer watchdog.||N/A||Submit A Report|
|Federal Bureau of Investigations||Conducts criminal investigations into businesses and individuals. Fields consumer fraud complaints.||1-800-225-5324||Submit A Report|
|State Attorney General||Your state’s primary judicial office, handling criminal prosecution and investigation.||N/A||Submit A Report|
|National Center for Disaster Fraud||Fields complaints regarding and investigates incidents of fraud pertaining to disaster relief efforts.||1-877-623-3423||Submit A Report|
You can also take matters into your own hands by lobbying against the transgressor on social media and other online outlets. Targeted Twitter and Facebook posts can be quite effective!
Notorious Debit Card Scams
There have been a number of high-profile debit card scams in recent years, many of which have been part of larger-scale retailer data breaches that also compromised millions of credit card accounts. Below, we’ve provided a breakdown of the most notorious cases. Understanding how previous debit card scams worked will ultimately enable you to better protect yourself moving forward.
- JCPenney, NASDAQ & 7-Eleven: Five men were charged for stealing 160 million account numbers from these organizations between 2005 and 2013, ultimately doing more than $300 million in damage.
- Home Depot: Hackers infiltrated the home improvement retailer’s point of sale systems in 2014, compromising 56 million payment account numbers and 53 million customer email addresses.
- Target: In December 2013, thieves stole 40 million payment account numbers as well as 70 million email addresses. The incident cost the chain a reported $162 million in 2013 alone. Overall, the breach has cost $252 million.
- Michael’s: In November and December 2013, 3 million credit and debit card account numbers were stolen after thieves infiltrated the company’s payments system.
- Shady Cancer Charities: The Federal Trade Commission cracked down on four illegitimate charities for allegedly spending more than $187 million in donations on personal expenses.
- Major Retailer Theft: In August 2008, 11 people were indicted for stealing millions of credit and debit card numbers from major retailers such as, Barnes & Noble, BJs Wholesale Club, Boston Market OFFICEMAX, DSW, Forever 21, Sports Authority and TJ Maxx.
- Disaster Relief Scams: Tragedies attract donations and support, both from the federal and household levels. They also attract fraudsters, both in terms of fraudulent claims against assistance funds or through the development of fake charities. Such fraud totaled $6 billion in the wake of Hurricane Katrina and $4 million following 9/11.
Ask the experts: How Debit Card Scams Work
It’s fairly clear that credit cards have a distinct advantage over debit cards when it comes to fraud as well as rewards earning. Yet people continue to rely heavily on their debit cards. For more insights into why that is, how we can all better employ our debit cards and what technological backup may be on the way, we posed the following questions to a panel of leading personal finance experts.
You can check out this bios and responses below.
- Why are debit cards still so popular? What is the main draw?
- What would you consider to be the red flags of a debit card scam?
- What are the best ways for people to avoid falling for a debit card scam?
- To what extent will our financial data be more or less sec
Image: Rawpixel / Shutterstock
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