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 more than 55,000 banking and cash machines and for making purchases at more than 410,000 retailers in Canada.
It is also very safe, with 99 per cent of transactions occurring in Canada without incident each year. And while your bank is working to protect you from fraud, there are simple steps that you can take to protect yourself.
What is debit card fraud?
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 of your card. They also have to capture your PIN to access your account.
Your bank is working to protect you
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.
When using your debit card, you are protected by the Canadian Code of Practice for Consumer Debit Card Services and Interac policies which guarantees that, if you are a victim of debit card fraud, you will get your money back from your financial institution.
Canada is moving to more secure technology
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 introduce chip technology, sometimes called smart card technology, for debit and credit cards. In addition to the magnetic stripe on the back, the cards will be embedded with a microchip —that will process transactions. The microchip is state-of-the-art in payment card technology and is extremely difficult to duplicate. In fact, chips cards have reduced fraud in some countries by up to 80 per cent. The implementation of chip-based technology is expected to be widespread by 2010.
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:
How you can protect yourself
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 can not be easily detected if your card is lost or stolen — don't use your birth date or address or part of your telephone number.
- If anything seems unusual about the ABM or point of sale terminal, don't use it; report the situation to police, the merchant or your financial institution.
- 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.
What to do if you are a victim
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.
The prevalence of debit card fraud
Debit card fraud is a crime that banks take very seriously. It’s important, however, to look at the facts to put this crime in perspective.
More than 10 million debit transactions are processed in Canada every day and more than four billion a year without incident. Of the 21 million active debit cards in circulation, about 1 per cent were impacted by a skimming incident in 2009, 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 and then clicking on “Fraud.”
