Debit Cards: The Hidden Risks
Author: James. Lee

Money is plastic now and for, what looks like, the future. As a
society we just carry less hard money around with us and we pay
people by giving them information, information which can be used
against us.

According to the industry group APACS: "figures show that the
number of adults shopping online has more than doubled in the
last five years to almost 30 million. This makes it more
essential than ever before that online shoppers take the
necessary steps to ensure they don't fall victim to fraud."

We all like to think of debit cards as the safe choice and
we're told it will help us keep our debts under control. A debit
card is linked directly to our bank account while a credit card
allows us to `buy credit' and pay it back later, with interest,
and none of us want to take out a secured loan to pay off a
credit card bill. However, a credit card may be the safer way to
shop.

Say for example you're in a shop and you pay the man behind the
counter with your credit card and he uses a machine to clone the
card and keeps a copy of what you typed into the pin pad. He
will use that information to make purchases running up a massive
debt in your name, one you will probably be unaware until you
receive a statement. At this point you explain to the credit
card issuer what has happened, they launch an investigation and
recover their losses through insurance or legal action against
the criminals. With a credit card you are protected against the
costs of fraud. Debit cards, a lot of us assume, carry the same
protection as credit cards, but we're wrong.

Depending on your bank you may not even be protected at all
should fraud occur with your card. This means you may end up
having to live with the consequences of stolen money. Even if
you are reimbursed all you money, the process takes time and
there is no grace period where they assume the charges never
happened. If all your money has been taken, this leaves you very
vulnerable.

Never was this lack of protection in debit cards exposed so
well when over the Christmas period 2,500 families were scammed
out of hundreds of pounds and only the people who paid by credit
card were reimbursed.

The BBC's Watchdog program, reported: "Zone Electronics, a
company based in Oldham, guaranteed delivery of the [Nintendo
Wii] console for the middle of December, hundreds of people
placed an order, paid their money and waited. Their payment was
taken but their Wii consoles never arrived," Adding:
"The company's website then shut down, with a message that it
wouldn't be able to send orders."

During their investigations they revealed that those who bought
the console with their credit cards were assured of having their
money returned, but: "customers who bought with debit cards may
not get their money back. Debit cards aren't automatically
covered in the same way, and customers will need to apply to
their card issuer for a refund."

Card fraud has been consistently battled by the card issuers
and the government, Home Office Minister Vernon Coaker said:
"Fraud is not something that can be tackled in isolation - the
best results can only be obtained by working together. The
Government takes fraud very seriously whether the victim is a
multi-million pound organisation or a single individual. That is
why we provide over £1 million a year, matched by the
Corporation of London, to allow the City of London Police to
expand its Economic Crime Department to tackle the problem. The
Fraud Bill, currently before Parliament, will clarify the law of
fraud to better equip law enforcers and prosecutors with a
modern legislative framework."

It is believed that they have made some progress in combating
fraud. Sandra Quinn, director of corporate communications at
APACS, said: "These latest fraud figures show that the
industry's efforts are making their mark. However, each and
everyone of us can also help defeat the fraudsters, and protect
our cards and online accounts, by keeping our PINs, passwords
and personal information safe and secure."


About The Author: James Lee is a freelance finance writer,
http://www.onlyfinance.com