Debit Card Fraud
Using debit cards has become a way of life for many Canadians. In fact, Canadians are among the biggest per capita users of debit cards in the world. Whether you’re withdrawing cash from an ABM, using your card to pay for this week’s groceries, or punching in your Personal Identification Number (PIN) for a night at the movies, your debit card is a simple way to access your money. Using your debit card is a convenient way to get money from 60,000 banking and cash machines and for making purchases at more than 450,000 retailers across Canada.
It is also very safe, with more than 99 per cent of the four billion transactions occurring without incident each year in Canada. And while your bank is working to protect you from fraud, there are simple steps that you can take to protect yourself.
Debit card fraud happens when a thief “skims” or swipes the information off the magnetic stripe on the back of your card to create a duplicate copy of your card. They also have to capture your PIN to access your account and withdraw money or make purchases. Debit card fraud can also happen if your card is lost or stolen and you haven’t taken steps to protect your PIN.
Banks have teams of fraud experts and highly sophisticated fraud detection and prevention systems to protect customers from debit card fraud. Very often, the banks’ security systems can detect fraud and reimburse and notify a client before the client realizes the fraud has occurred.
But banks understand that being the victim of debit card fraud can be upsetting for a customer: after all, their money is missing. If this does happen, banks will immediately look into the matter and get the money back to the customer as quickly as possible, which can usually happen within a few days or even before the customer knows it’s gone.
When using your debit card, you are protected by the Canadian Code of Practice for Consumer Debit Card Services and Interac policies which guarantee that, if you are a victim of debit card fraud, you will get your money back from your financial institution.
Security measures are constantly being enhanced and technology is being upgraded to prevent fraud. Banks, the Interac Association and the major credit card companies are almost finished moving to chip technology for debit and credit cards. In addition to the magnetic stripe on the back, these cards are embedded with a microchip. When making a purchase, rather than swiping your card you now insert it and leave it in the store payment terminal while the transaction is processed. These cards use a technology called “cryptography” that allows the card and the store terminal to communicate with each other during the transaction and carry out security checks to ensure the card is valid.
The microchip is state-of-the-art in payment card technology and is extremely difficult to duplicate. In fact, chips cards have significantly reduced fraud in some countries where these cards are used. The transition to chip-based technology is on target, with virtually all debit cards and ABMs capable of chip transactions and all store terminals at retailers will be converted by the end of 2015.
The Interac Association, Visa Canada and MasterCard Canada are bringing chip card technology to Canada on behalf of the banks and other payment card partners. To learn more about chip technology, visit their websites at:
Your bank has sophisticated security systems in place, but there are still important steps you can take to further protect yourself:
- Always protect your PIN: use your shoulder or your hand to shield your PIN when entering it into the keypad.
- If you have a chip card, always insert first instead of swiping when making a purchase. This will protect you from having your card skimmed and, if the store terminal isn’t chip capable, it will prompt you to swipe. And always remember to take your card when the transaction is done.
- Never lend your card or disclose your PIN to anyone else.
- Memorize your PIN; don’t write it down.
- Make sure your PIN cannot be easily detected if your card is lost or stolen — don't use your birth date or address or part of your telephone number.
- Regularly review your transaction history online or on your monthly bank statements and report anything unusual to your financial institution immediately.
- Change your PIN periodically.
If you are a victim of debit card fraud, you should contact your bank immediately and they will take the appropriate steps to protect you. For example, they may block your card to prevent losses, ask you to change your PIN or cancel your card and issue you a new one. Depending on the circumstances, the bank may also ask you to sign an affidavit if there are fraudulent transactions in your account. If there is money missing from your account, they will work to get it back as quickly as possible, usually within two or three days or sometimes before you even know that it’s gone.
Debit card fraud is a crime that banks take very seriously, and their efforts to fight this crime have been paying off. Debit card fraud losses have dropped from a high of $142 million in 2009 to $29.5 million in 2013.
More than 10 million debit transactions are processed in Canada every day and more than four billion a year without incident. Of the 23 million active debit cards in circulation, less than half of one per cent were impacted by a skimming incident last year, so the odds of it happening are quite low. But banks will continue to adapt new technologies and new practices to fight this fraud, work with police and protect their customers.
The Interac Association collects debit card fraud statistics from banks and other debit card issuers, which can be found on their website by clicking here. Interac also has more information about security, including a video, on its website.
The CBA offers a free fraud prevention seminar for seniors as part of its Your Money Seniors financial literacy seminar program.
Find out more and request a seminar for your seniors’ group at www.yourmoney.cba.ca/seniors.