Debit card fraud is real and it’s going on all the time. While EMV technology and consumer preference of credit cards over their debit cards is contributing to lower fraud numbers, the reality is that debit card fraud is still a real threat.
With a focus on digital security threats, hacking, and credit card security, it’s actually easier now for debit card fraudsters to slip through the cracks unnoticed. Customers have become nonchalant about how they protect their PIN and handle their debit cards in general, making them ripe for savvy fraudsters.
For merchants, this debit card fraud is often committed in their brick-and-mortar stores or online without them ever knowing about it. Often, it takes a customer noticing a drop in their bank account statement before the fraud is noticed, and by that time the fraudster may have moved on to another merchant.
Debit Card Fraud Damage to Merchants
While most merchants don’t list the threat of debit card fraud high on their list of concerns, it’s important to not overlook the potential effects of this fraud. The damaging impacts of debit card fraud may at first appear minimal; however, the trickle-down effects can be just as much of a detriment as that of credit card fraud or a database security hack.
Consider this scenario and its lasting impacts:
- Customer pays for a purchase in-store at their local bookstore with their debit card.
- A few days later, the customer notices unexpected withdrawals from their bank account. The last known use of their debit card was at the local bookstore.
- The customer contacts their bank to alert them to the problem. In the meantime, more bookstore customers are reporting similar bank account discrepancies.
- The local bookstore owner notices a drop in sales and is alerted to negative posts and reviews online.
- Finally, the local bookstore owner is contacted by the police and alerted to the debit card fraud. The source of the fraud is traced to an illegal PIN terminal and is suspected to be part of an organized crime set-up and a temporary employee hired during the busy holiday season.
- The local bookstore owner struggles to rebound from the debit card fraud.
So, yes, debit card fraud is a real and present threat. Just as with chargeback fraud and online payment fraud, the more that merchants and customers understand how debit card fraud is committed, the better.
Debit Card Fraud: Need to Know
When it comes to preventing debit card fraud, merchants should follow the advice and tips typically provided to customers about fraud awareness. Knowing how debit card fraud is committed helps reinforce why it’s important to remain vigilant and limit risk.
Merchants and their customers need to know the facts on how easily debit card fraud occurs.
- Beware of free public Wi-Fi. Hackers can use key logging software to capture online banking details, debit card information including the PIN, and customer details on open and unsecured networks. Merchants should only provide password-enabled Wi-Fi, and remember to regularly change the password.
- Phishing emails. Merchants can become unknown victims of debit card fraud when fraudsters use a stolen customer database to email customers, mimicking the merchant. Often, these emails ask customers to update their digital details or to provide their PIN for verification. While it appears obvious that this is dishonest, because the email is such a good copy of the merchant, many customers do provide the requested information.
- PIN theft. Because many customers are not concerned about debit card fraud, they fail to pay attention to who is standing behind them in line. Spying and then distraction that causes the customer to forget or drop their card or opens them to wallet theft is one of the most popular methods of debit card fraud. Merchants must remind customers to give one another space when in line and be aware of any suspicious behavior.
- Fake PIN terminals. The merchant and customer believe the PIN terminal to valid and secure. When in reality, this terminal is fake and rather than transmitting details to the bank, it is copying the customer’s card and PIN. This information is then sold on the Dark Web to fraudsters who use it to create fake debit cards.
These examples highlight why it’s important that merchants stop neglecting the lingering threats of debit card fraud. For CNP merchants, debit card fraud is still a threat – many customers have debit cards that support online purchases. For CNP merchants who accept such payments, they must have the payment solution security in place to secure these transactions.
Preventing Debit Card Fraud
Just as the case with most fraud prevention recommendations, there is no one-size fits all approach to preventing debit card fraud. However, merchants should use chip-activated terminals to protect themselves and their customers. Most debit cards are chip-enabled, allowing customers to tap or hover their card or smartwatch for secure token-protected payment.
In addition, merchants must comply with all recommendations provided to them by their terminal provider. This includes updating to the latest version, securely stowing the terminal when the store is closed, and being aware of any suspicious problems with the terminal.
Having the right solutions in place to secure customer data and fraud risk are key in ensuring that you do not become a victim of fraud. Knowing the risk factors and having a solution in place that allows for easy communication with your customers when fraud is suspected goes a long way to ensuring good customer relationships and limiting fraud risk.