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Home >> Accounts >> ATM/Debit Cards
Debit Card Security Problem
My husband used his debit card over the phone to pay for our cell phone bill. While we were on our honeymoon, someone used the card number to spend $2,200 of our money. We've since found out that it's probably an employee of the cell phone company who took our information from their files to utilize the card.
Should we even use our debit card over the phone like that--without the ability to enter a PIN or sign a receipt? What should we do now? Will our bank be responsible for any losses, us, or the merchants who accepted it?
The card was actually used over the internet by this person where you do not have to enter a PIN or sign a receipt. Would the process be any different if this would have been our credit card?
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 Most debit cards come with consumer security protections under either special Visa/MasterCard rules or banking Regulation E. In both cases you should contact your bank and file a claim for unauthorized transactions. You want to do this as soon as possible to reduce the losses you may take, as well as your bank. They can cancel the card and reissue a new one that won't be compromised.
The Visa/MasterCard rules generally have a zero liability rule. This means that your bank will give you back all your money and they'll go back to any merchants as very detailed merchant rules allow. The bank may or may not get back some of this.
If your card doesn't have a Visa or MasterCard logo and the zero liability protections, you'll file a claim under Reg. E. The bank will complete an investigation. Because there was no authorized access device used, if the bank finds that you didn't conduct these transactions, authorize them or benefit from them, again you should get your money back. If they can trace it to any certain person, they may file charges and use the judicial system to try and recover funds they can't have merchants reimburse.
These protections are in place to facilitate electronic commerce. If you are not comfortable with the capabilities of your debit card, you may look for one that is more limited in how it may be used, or not have one.
Credit cards do provide protections for purchases, but not better than the zero liability rules. Credit cards are better for many purchases because if you make a purchase and are not satisfied with the product or service, a credit card allows you to contest the transaction. You could return the item not have to pay. You don't have this protection under a debit card.
Published on BankingQuestions.com 2/14/07
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