Well, I woke up this morning to quite the scare! I was doing my online banking through Quicken and saw a mysterious charge on there for $1262…. so I asked Rob if he knew what it was – he didn’t. Then I went to the bank’s website and looked up my pending transactions and there was a whole slew of them that were not ours! Totalling $2135!!! You can imagine that my heart stopped – especially since I’ve had a lot of fears around money lately with the impending house buying. I immediately got on the phone with the bank and thankfully, they were very good about it. Plug for Commerce Bank here! I went into the branch this morning and they already reissued us our debit cards, they’ve cancelled our old ones and they are going to credit us the fraudulent charges until the investigation is completed. So, I’m satisified with that outcome – it looks like all the charges were in Mexico. Very strange! And now I’m totally paranoid to use my card for anything. Damn thieves.
Freaky!
The banking industry in general has some newly discovered serious security issues around debit cards in the last year or so…
It has been found that many point of sale systems are poorly designed from a security point of view in as much as they leave debit pin numbers in temp files on the store’s computer system.
Another issue, it was reported that a recent effort to upgrade ATM machines caused them to send transaction data across the internet in plain text (meaning that anyone intercepting the data would get an unencrypted copy of the information, including account numbers, names, and addresses).
Another problem, many stores and processing centers have been illegally keeping pin codes and CCV numbers in their databases with no security at all.
Bottom line, using debit cards in an insecure environment is much more risky today that it was just a year ago.
My wife also had fraudulent transactions appear on her Commerce Bank debit card. That’s when I started monitoring news about debit and credit card fraud (and hearing about all of the things I mentioned above). Commerce Bank had done well with us so far (money returned, new cards issued). However, be aware that the law does not require them (or any bank) to do as much as they would have to do if a credit card was involved. For example, if you fail to notify the bank of a fraudulent charge within 2 days of discovering it, you would be liable for the first $500 (not $50, like a credit card). After 60 days, you would be liable for the whole amount. In addition, banks can still charge overdraft fees and bounced check fees if your balance goes below zero while a transaction is being disputed.
Bottom line, the best way to minimize the risk of fraud when using a debit card:
1) Insist on using it as a credit card at stores and such. In this way, your pin cannot be compromised by bad security at the store or the processing center. If a store will not let you use a debit card as a credit card, then don’t shop there.
2) Only use your pin at your bank’s ATM at an actual bank office location. Thay way, your pin is cannot be transmitted over the internet (unless, of course, the bank branch connects to the central computer over the internet — unfortunately, you cannot do much about this).
3) Buy small purchases with cash.
4) Change your pin at least once per quarter.
5) Maintain a checking account with a low balance for purchases by debit card and a different account which doesn’t have a debit card associated with it for storing your cache of cash. Transfer money to your debit card account before you make large purchases (I know this sounds paranoid but who needs to let tons of cash sit in a checking account and be at risk for fraudulent transactions? We do this and it probably saved over $5,000 of fraudulent withdrawals from our checking accounts when my wife had the problem. Commerce bank makes it easy to transfer money between accounts online or at the ATM machine, so it ends up being a minor inconvenience. The only drawback, at least with Commerce, is that we have to maintain two minimum balances).
Point to take home: All of us have to take control of our own security. We cannot sit back and trust all the stores, all the processing centers, and the bank to do it for us. There are just too many people and systems involved.
I know this feeling all too well as it happened to me recently with a fradulent charge on my Discover. My heart skipped a beat when I saw the charge and knew we hadn’t made it. I still can’t figure out how the person got our info since our cards were not stolen. In any case, we immediately went to the bank and turned in our debit cards for ATM-only since we never used them anyway and we weren’t sure how much of our info this person had gotten. We shred everything and are very careful, so it still blows my mind. Luckily with Discover we didn’t have to pay a cent.
Oh that feeling came rushing back to me reading your post. That has to be the worst feeling EVER! I’m glad your bank helped out so quickly. I was out $7000.00 for 2.5 MONTHS with US Bank. Needless to say I don’t bank with THEM anymore!
[...] The $2200 was finally credited to our account today for those fraudulent charges I posted about last week. That is a lot of money to go through in a matter of days. All of the charges were from Mexico and there were a few gas charges for close to $100. What were they driving, an 18-wheeler?? [...]