There are people out there that say “Use your debit card instead of credit cards. They are just as safe and have the same fraud prevention.”
The thing is, they aren’t telling you the full story.
Sure, the debit cards share the same fraud protection IF you run the transaction as credit since it runs through Visa and Mastercards network.
So maybe you’re saying “but I’ll just run everything as credit and I’ll be protected!”
Unfortunately, it isn’t that cut and dry.
This is What You are Responsible for with a Debit Card Transaction
- You’re responsible for only up to $50 of unauthorized transactions if you report the card as lost or stolen within two business days.
- Didn’t report the fraud within two days? You could lose up to $500 if someone uses your physical debit card without your permission — provided you report the fraudulent charges within 60 days after your statement is mailed to you.
- Didn’t make that 60-day window to report fraud? You face potential unlimited damage if someone uses your ATM or debit card without your permission.
Also, there’s this:
Under the EFTA, a bank has 10 business days to investigate the matter (20 business days if your account is new) and report back to you with its results. If the bank needs additional time, it may, under certain circumstances, temporarily give you some or all of the disputed amount until it finishes its investigation. Generally, a bank is allowed up to 45 days of additional investigation time (90 days for certain transactions).
Source: https://dfi.wa.gov/financial-education/information/debit-cards-frequently-asked-questions
It also seems like places such as PayPal has the ability to run a transaction as debit without your pin number.
What Happened When My Debit Card Was Compromised
This is exactly what happen me.
I didn’t have a credit card for this business yet because it was a new business, so I used it a couple of times for an online service.
I woke up one morning with a $59.99 PayPal charge from a shoe merchant in California on one of my business debit cards. I called the bank and disputed the charge. They said it can take TWO WEEKS to get a credit, and up to 90 days to investigate the claim.
Here’s the thing – since this is a debit card, I now have that money missing from my checking account for 14 days. If this was a credit card, I would have immediately gotten a credit while they investigated. Not only that, but they took the credit card issuers money and not my money.
If this was a personal account and you didn’t have any savings while living paycheck to paycheck, that may mean you can’t pay rent, for food, transportation, etc. Scary, huh?
From this point forward, our debit cards will remain frozen.
