The massive Target data breach – which just keeps getting worse – is a reminder about the danger of using a debit card to make purchases.
In late December, the big-box store announced that hackers had stolen the credit and debit card information of 40 million customers. On Friday, the retailer revised the estimated number of affected customers upward to 70 million to 110 million, including people who didn’t shop at Target during the holiday season.
The Minneapolis-based chain earlier announced the thefts included debit card PIN numbers, too. That’s very bad news.
In an ideal world, we’d all stop using debit cards to make purchases, period.
But we know that’s not realistic for everyone, especially those who don’t want to use credit but also don’t want to carry around a ton of cash.
So how about this: If you’re buying something with your debit card, use it as a credit card where you sign for your purchase.
Do not use it as a debit card. The only place you should ever use your PIN number is at an ATM.
Of course, a thief with your debit card number can still defraud you, but having the PIN makes it that much easier to do so.
As journalist Brian Krebs, who broke the initial breach story, wrote on his website KrebsOnSecurity.com, a thief with a debit card number and your PIN can clone a card and use it “at ATMs to pull cash out of the victim’s bank account.”
Most banks will refund any money stolen through this kind of scam. But that takes time, and if you’re hit at the wrong time, like the end of the month, the mortgage will still come due.
Even then, banks aren’t required to make up for the entire loss, according to the Federal Trade Commission.
If your debit card is lost or stolen and you report the fraud within two business days, you’re liable for $50. Between two business days and 60 calendar days, you’re on the hook for $500. If for some reason you don’t notice the theft until more than 60 days have passed, the entire loss is yours.
If you didn’t lose your debit card but your number is used by a thief, you have 60 days to report the fraud.
Another lesson here is to check your account balance every day. That way, you can spot any kind of fraud before it gets out of control, whether your bank offers you additional protections or not.