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Identity Theft Council cautions consumers to think twice about using an ATM/debit card

by Neal O'Farrell on December 27th, 2011

In light of an increase in the number and sophistication of skimming scams around the country, the Identity Theft Council (www.identitytheftcouncil.org) is warning consumers and business owners to be especially careful and selective when using an ATM or debit card to make purchases.

While a credit card fraud can be an inconvenience, consumers should realize that it’s the bank’s money that is being stolen, and it should not affect the funds the consumer has in their bank or credit union account.

If an ATM or debit card is stolen however, the funds will be taken directly from the victim’s bank account. And while victims should get their money back eventually, it may not be in time to pay important bills like rent, mortgage,  and even groceries. In the case of the recent skimming breach that affected 24 Lucky Supermarkets in Northern California, some victims are reporting that they’re unable to buy groceries because of delays with their bank either in replacing compromised debit cards or in accessing their accounts.

And the nation’s 27 million small businesses are also vulnerable because many are not aware that zero liability does not apply to business accounts. Which means that a small business owner’s cash reserves could be wiped out by a single card theft, and the money will not be reimbursed by their financial institution.

The Identity Theft Council recommends the following precautions:

  • The easiest way to avoid skimming is to use cash, especially in places where it’s easy for thieves to tamper with a device.
  • Be vigilant and do a cursory inspection of the card reader, ATM, or gas pump for anything that looks unusual. However, don’t rely on a visual inspection because many skimmers are hidden inside the card reader or gas pump where a consumer will never spot them.
  • Use a credit card instead of a debit card. A debit or ATM card takes money directly from your bank account, and while you should get it all back, it may not be in time to pay important bills like rent. If you use a credit card (and pay it off fully each month) it’s the bank’s money that’s at risk.
  • Resist offers by merchants, especially gas stations, to give a discount for using a debit card instead of a credit card. The small savings at the pump may not be worth the price of an emptied bank account.
  • If you’re a small business owner, don’t use an ATM or debit card at all because if thieves do manage to steal from your account, you don’t have zero liability and will not be compensated.
  • Always check your bank and credit card statements carefully each month for any unusual charges, and challenge them immediately.
  • If account alerts are an option, use them. Many financial institutions offer free alerts by email or text if there are any transactions on your account, allowing you to challenge or dispute them quickly.
  • If you do fall victim and money is removed from your account, contact your financial institution immediately, cancel the card, and have a new one issued with a new PIN. It shouldn’t be necessary to close your account completely, which can be a big inconvenience, but you should ask your bank for their advice on this.
  • If you’re notified or suspect that your card has been compromised in a breach, and you don’t close the account, monitor your accounts closely for the next few months. Thieves often wait until media coverage of an incident blows over and guards are down before using stolen information.
  • Don’t share ATM or debit cards with other family members or employees because it only increases the chances that someone will ignore your rules and expose you to theft.
  • Be on the alert for bogus calls pretending to be from your bank, credit union, or credit card company, claiming to be in connection with a recent breach, and asking you to confirm account or personal information. If in doubt, contact your financial institution through the customer service or fraud number provided on the card or their web site.

Thieves are more determined than ever to attack point-of-sale systems because of the financial returns. In early December the Department of Justice announced the indictment of four Romanian nationals accused of compromising point-of-sale devices at more than 200 different businesses and stealing the card information of more than 80,000 customers. The losses are believed to be in the millions of dollars and the scam may have gone undetected for nearly three years.

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