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Lots of banks these days offer what are called "debit cards" or "check cards". These cards are generally issued by MasterCard or Visa, and they look and operate like credit cards.
There are, however, two big differences. The first is obvious, of course. The money for debit card purchases comes straight out of your checking account, so you don't owe money the way you do on credit cards. The other difference is not so obvious, and could be dangerous.
Credit card fraud is a growing concern, and thousands of Americans have been victimized by people who use their credit cards fraudulently. The Secret Service estimates credit card fraud losses as over a billion dollars a year, and arrested almost 2,500 credit card criminals in 1996. However, it is just as easy for criminals to use a Visa or MasterCard debit card for fraud -- in fact, the criminal may not know, or care, that the card is a debit card instead of a credit card.
The difference with fraud in dealing with debit cards is that the money stolen comes out of your account, rather than an account owned by a bank or a credit card company. As a result, your bank may charge you overdraft charges if a criminal steals more money than you have. If you have outstanding checks, the bank may also return those checks and charge you another overdraft fee. In fact, if you have a lot of checks outstanding, your bank may charge you more in fees than was stolen by the criminals!
Also, debit cards do not have the same level of legal protection as credit cards. Federal law limits your liability as a credit card user for fraud to $50. You also have the right to dispute charges and the right to withhold payment temporarily for fraudulent charges. However, this law does not apply to debit cards. Some banks may offer fraud protection on your debit card, however, so be sure to ask about it.
If you discover fraud on your debit card, report the fraud to the police as soon as possible. Then, inform your bank. Ask the bank to suspend or cancel your debit card and issue you a new one (with a different number, of course) immediately. You can also call the Federal Trade Commission at 877-FTC-HELP to report the theft.
Check your bank balance and figure out if there may be a possible shortfall. If any checks are in imminent danger of bouncing, try to get cash in the account to prevent any additional overdraft fees. If you can't scrape together enough cash to cover all of the deficit, inform your creditors of the fraud and ask them to be patient while the situation is being resolved.
If your bank charges you any fees because of debit card fraud, contest them immediately. If your bank refuses to refund the fees or to refund fraudulent charges, contact your Senator or Congressman and ask them to make an inquiry with the Treasury Department.
Remember, the key difference between debit card fraud and credit card fraud is that it's your money being stolen. Act fast to protect your bank balance.
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