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Home >> Accounts >> ATM/Debit Cards
CU Authorizes Fraudulent Debit Card Use
I live in San Francisco. I have a Visa debit card issued by a credit union, which is linked to my checking account. I never use it to make purchases, only withdrawals. I haven't lost it or given the information to anyone. Recently, I checked my account balance online and found the shocking news that someone had made fraudulent purchases and used all the funds in my checking and savings accounts, overdrafting them for a total of about $400. The credit union authorized subsequent purchases, bringing my balance to about -$800.
I have already cancelled my debit card and filed a police report. In the beginning of the month I'll get a TANF cash aid direct deposit and the credit union is going to take that cash and pay itself for what "I owe" from the fraudulent purchases the credit union authorized. I will not have means of support until the money is refunded to me, allegedly in a week.
Is the credit union legally liable to authorize purchases (in Mexico, by the way) after my account was empty? Since I did not lose my card, nor used it for purchases, and have not been to Mexico, how was information on my account obtained to commit the fraud? I assume the purchases had to be made online, correct? Don't businesses ask for the card holder's name and address as well as the 3-digit security number?
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 It's entirely possible that your debit card account number was compromised and used fraudulently. The compromise may have been part of a hack into a merchant system in which your card information was stored or of a card-skimming scam in which a data skimming device is attached to an ATM.
It appears that your credit union permits members to overdraw their accounts using card transactions (purchases and perhaps ATM withdrawals). You should ask them about that policy and find out if you can opt out of it, if that's what you want to do. Some institutions with opt-out features require a member to opt out of the payment of overdrafts completely; others may offer an opt-out restricted to card transactions.
Be sure, if your credit union asked for it, that you promptly provide a written claim that the transactions in question were not authorized. That can speed up your receipt of credit from the credit union.
Published on BankingQuestions.com 10/19/09
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