Jackie here, with AllClear ID. “Will that be debit or credit?” Many people assume that their answer to this question only affects the card they pull out of their wallet, but they are wrong. When it comes to identity theft you have very different protections depending on the type of card you use.
A debit card is one issued by your bank that is tied directly to your checking account. It is the card you use at the ATM and at retailers when you want money to come directly out of your bank account. When using a debit card you have two options: enter a PIN or run the card as credit and sign. Both are considered debit transactions and offer the same basic protections in cases of identity theft or fraud. Here’s how you’re legally protected if your debit card is misused:
Debit Purchases/Withdrawals made with your physical card:
- Unauthorized transactions reported within 2 business days have $50 consumer liability
- Unauthorized transactions reported between 3-60 days have $500 consumer liability
- Unauthorized transactions reported over 60 days no protection
Purchases/Withdrawals made with debit card number only
- $0 consumer liability for all purchases reported within 60 days
- Consumer is responsible for all charges reported after 60 days
Debit transactions come straight out of your bank account which means that you may be without your funds while the bank investigates any fraudulent charges. The bank is required to provide temporary credit in the amount of the disputed charges after 10 days while they examine your claim.
Credit cards are a line of credit extended by a company to consumers. These cards will typically issue a monthly bill for any charges rather than deducting the money directly out of your bank account. Some of the top credit card companies include Visa, Mastercard, American Express and Discover. Here’s how you’re legally protected if your credit card is misused:
Credit Purchases made with your physical card
- $50 consumer fraud liability (most companies will waive this fee)
- If you report missing cards before charge is made, there is $0 consumer liability
Purchases made with credit card number only
- $0 consumer liability
Consumers also have additional protections when using credit cards through the Fair Credit Billing Act. This law protects consumers from poorly made or damaged merchandise that was purchased with a credit card. You may also have coverage for items purchased but not received. This protection is available after efforts have been made to resolve the problem with the merchant and specific requirements will need to be met.
For more information on avoiding credit card fraud read the FTC’s Consumer Fact Sheet: Avoiding Credit and Charge Card Fraud.
The next time you head out for a shopping trip make sure you know what protections you have available should you become a victim of identity theft or notice fraudulent charges on your card statement.