Moneywise and Yahoo Finance LLC may earn commissions or revenue through links to the content below.
You might think that credit cards are the payment method most targeted by financial fraudsters, but that’s not true. It is, in fact, the debit card that is most followed by fraudsters – and the number of cases involving them is increasing, according to a Federal Reserve survey of financial institutions (1). And it can also surprise you by leaving you more vulnerable to financial loss.
When you think of debit card scams, you might imagine people’s debit cards being physically stolen or their card number and PIN being skimmed. But there are other debit card scams on the rise that are more complicated. And, as with other scams, knowing how they work can mean the difference between keeping your finances intact and falling victim to another scam.
As the Detroit Free Press recently reported, new debit card scams are popping up and gaining momentum (2). One of the weirdest is warning banking customers that there is a problem with their account, which is a common theme for financial scams.
Then, victims are asked to destroy their debit cards but leave the chip on the front of the card intact for security purposes. Fraudsters then steal the chips by sending a “bank representative” to pick up the cards with the chips intact and using social engineering to obtain the PIN numbers needed to use the cards. With Chip and PIN, they can steal funds from the victim’s bank account.
Of course, debit card fraud isn’t the only thing consumers have to worry about. Check fraud is also on the rise, rising 10% in 2024, according to a Federal Reserve survey.
Independent Community Bankers of America is working with the US Postal Inspection Service to educate customers about check fraud through handouts at various banking locations.
Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)’
Financial fraud is generally a problem, however, as a consumer, if your debit card or checking account is targeted, you may be at greater risk of loss.
Under the Fair Credit Billing Act, losses to consumers are limited to $50 for fraudulent credit card transactions that are reported within 60 days (3). However, most credit cards offer full protection, meaning that if your card is stolen or used by a criminal, you probably won’t lose a dime.
Debit cards generally do not offer the same protection. When your debit card is stolen or accessed by a criminal, money comes out of your account immediately.
If you report the fraud within two business days, you are limited to $50 in losses. If you report the fraud after two days and within 60 days, you are limited to $500 in damages – not a trivial amount. Even worse, if you report the fraud after 60 days, you could lose the entire amount that was stolen from you (4).
With checks, the time frame varies. The law says consumers have one year to report check fraud, but there are some exceptions. For example, many banks require notification within 30 days, while others expect an alert within 14 days of sending a bank statement (5).
As a consumer, it’s important to take steps to protect yourself from debit card and fraud checks. This includes knowing about the latest scams including the one mentioned above.
But that doesn’t mean criminals won’t try to steal your money in other ways. Perhaps they can steal a replacement debit card from you in the mail or steal checks you write, changing the payee and cashing them.
One option you can look into for security is to install a mailbox lock where the incoming mail slot remains accessible while the storage portion remains locked to anyone without the key. This can prevent criminals from getting to your mail while allowing the mail carrier to deliver it.
You can also install security cameras outside your home that cover the area of your mailbox. However, this may provide only limited benefits. If a criminal is going to steal your mail, chances are they’re going to wear enough gear to mask their identity.
For debit cards, other fraud prevention methods include knowing where your card is at all times, covering the keypad when you enter your PIN, and when purchasing items online, making sure you shop on a legitimate, secure site while avoiding public Wi-Fi networks.
Additionally, look for loose components in debit card readers at merchants. This could be a sign that a machine has been tampered with and a skimmer has been installed.
Other tips include regularly monitoring your bank account to check for fraudulent transactions and never responding to unsolicited calls, emails or texts that appear to be from your bank. If you have concerns, call your bank directly or visit a local branch.
Also, never give your account or PIN over the phone. The same goes for your social security number (or other personally sensitive information as a general rule). Having this information can make it easier for a criminal to steal money from your account, and in some cases, steal your identity.
When it comes to checks, fraud prevention methods include writing checks with permanent markers or sending them electronically from your bank. With the latter, your bank has a record of the intended payee, so it can be easier to prove fraud.
It’s also a good idea to bring checks to the post office and mail them directly instead of leaving them in your mailbox to be picked up by the mail carrier. Another safe option is to deliver the check in person.
Online scams are on the rise, with the FBI reporting that in 2024, online fraudsters defrauded Americans of $16 billion, a 33% increase from 2023 (6). That same year, the FTC reported that the dollar amount for losses from online scams was projected to rise.
To protect yourself and your loved ones from these online scammers, consider using a scam alert service like Aura.
Aura’s online scam tracker uses AI monitoring to spot unusual transactions, sending alerts within minutes for any suspicious or significant activity. Their US-based fraud experts are available 24/7 to help you find the right information and resolve the situation quickly.
Aura also offers credit monitoring, identity theft protection and parental controls so you can make sure your kids don’t fall prey to these scams. Plus, Aura delivers fraud alerts 250 times faster than other services of its kind.
Sign up today to enjoy this extra layer of security when shopping online.
Ultimately, prevention is your best defense, so be proactive in learning about the latest security measures and how scammers try to prevent them.
We rely only on vetted sources and reliable third-party reporting. For details, see our editorial ethics and guidelines.
Federal Reserve (1); USA Today/Detroit Free Press (2); Cornell Law School Legal Information Institute (3); Michigan Consumer Protection (4); time (5); FBI (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
