Debit card fraud – Don’t become a victim

November is National Crime Prevention & Community Safety Month in Canada. This information came from our friends at the Canadian Safety Council, but is helpful information for anyone who uses a debit card.

People use debit cards millions of times a day at point of sale terminals and banking machines to make purchases and to access their accounts. While the majority of transactions are completed without any problems, there have been an increasing number of cases of debit card fraud in the past several years. Across Canada, banks and financial institutions reimbursed debit card customers about $104 million stolen from their accounts in 2008. Just three years back the amount of dollars lost to debit card fraud was $70.4 million.

Everyone should take steps towards protecting their debit cards and personal identification numbers (PIN), by doing so, this will help reduce your chances of becoming a victim of fraud. Some financial institutions may cover losses in cases of fraud. Although, you may be held liable for your losses if you are negligent with your PIN and card.

How you can protect yourself against debit card fraud:

• Always protect your PIN: use your body or your hand to shield your PIN when entering it.
• Never lend your card or disclose your PIN to anyone.
• Memorize your PIN; don’t write it down.
• Make sure your PIN cannot be easily detected if your card is lost or stolen — don't use your birth date or address or part of your telephone number.
• If anything seems unusual about the automated banking machine (ABM) or point of sale terminal, don't use it; report the situation to police, the merchant or your financial institution.
• Regularly review transaction history online or your monthly bank statements and report anything unusual to your financial institution immediately, for example, missing transactions or a transaction you did not make.
• Change your PIN periodically.
• If your card is lost, stolen, retained by an ATM, or you find that there has been an unauthorized transaction, notify your financial institution immediately.
• Be conscious of anyone trying to distract you at the banking machine.
• Never let your debit card out of your sight; swipe the card yourself, if you can't - watch to make sure that it is not being double swiped.
• Know your daily cash withdrawals and daily purchase limits. If they exceed your needs, you may want to ask your financial institution to reduce those limits.

How debit card fraud can occur:
A thief watches as you enter the PIN – Then distracts you and steals your debit card.
Easily identified PINs – Your purse or wallet is stolen and the thief finds your PIN written down somewhere close to your card, or, successfully tries a commonly used PIN, such as your birth date, based on information found in your wallet.
Surf and Pick Pocket – A thief watches as you enter the PIN and subsequently distracts you and steals your debit card.
Card Jam – After your card becomes jammed, a helpful stranger suggests that you try to input your PIN a few times, but the card remains stuck. After you leave, they remove your card and have your PIN.
Skim and Clone – There have been cases of equipment being set up at a business to illegally collect your PIN and card information. For example, your card may be swiped twice and a camera records your PIN information.
Bogus machines – A bogus machine, that replaces the real PIN Pad, lifts your card and PIN information and issues a transaction receipt but does not actually send the transaction to the financial institution.

What to do if you are a victim of fraud:
If you are, or think you are a victim of fraud, it is important to deal with the incident as soon as possible. Notify your financial institution immediately and call the police to make a report. When you report the incident, your financial institution may ask you questions about the occurrence to ensure that you did not authorize the transaction or that you did not contribute to the loss. As well, you should keep a written record outlining the circumstances of the incident, and what steps you took after the occurrence; for example, who you spoke to.

Situations where you may be found liable:
You are not liable for losses resulting from circumstances beyond your control as long as you report the incident as soon as you are aware of the loss and cooperate in any subsequent investigation. You may be found liable if you keep an obvious copy of your PIN in close proximity to your card; for example, writing down "Bank-1286". Choosing an unacceptable PIN selected from your name, telephone number, date of birth, address, or social insurance number. You will also be found liable if you voluntarily give your PIN and/or card to someone who subsequently contributes to the fraud.

The good news is that security measures are constantly being enhanced and technology is always being upgraded to prevent fraud. Chip technology, sometimes called smart card technology for debit and credit cards, is being introduced all over Canada. All cards will soon be embedded with a microchip that will process transactions. The microchip is state-of-the-art in payment card technology and is extremely difficult to duplicate. In a number of other countries, where the chip cards are currently used, they have been effective in reducing fraud. The implementation of chip-based technology has already begun in Canada and it’s expected that the adaptation to the chip will be widespread by 2010.

For more information in Canada, please visit Industry Canada or the Canadian Bankers Association.