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Convenience, this is probably the number one thing most Canadians associate with their debit cards. In our day to day lives the convenience of not having to have cash on us all the time is priceless, this is why in Canada debt cards are used millions of times every single day. Whether it’s to purchase your morning coffee, lunch out or groceries on your way home, you know that you’ll never have to worry about how you’re to pay for something. That being said, the same reasons why your debit card is so great are the same reasons why debit card fraud has become so common place.

The good thing is there are a few steps you can take to help protect yourself from being the victim of debit card fraud. The following tips and tricks aren’t a guarantee but understanding your rights and responsibilities as a debit card holder is invaluable information.

Understanding Debit Card Fraud

Debit card fraud happens when the information contained on your debit card is compromised and used to illegally obtain funds from your account. The fraudster can use your debit card to make unauthorized payments and withdrawals. Simply put, you’re hard earned money is being stolen from right under your nose.

Protecting Yourself against Debit Card Fraud

Being safe from debit card fraud scams is a personal initiative; it has to begin with you taking responsibility of your card and protecting your PIN number.

  • Do not share your PIN with anyone including law enforcement agencies, friends, family and financial institutions.
  • Always keep your debit card safe and do not lend it to anyone. Change your PIN if you suspect someone knows it.
  • Avoid writing down your PIN, instead memorize it. If you must write it, do not make it too obvious; try to interchange numbers or use roman symbols.
  • Avoid choosing obvious PIN numbers, for example, your date of birth, or your address. This increases your vulnerability to scams.
  • Report to your financial institution if you have lost your debit card. With the advancement in technology, hackers can hack past your PIN and use your card.
  • Report any suspicious payments that you see on your statement as this can be an indication of fraud.

Protecting Yourself While Using Your Debit Card

  • Swipe your card yourself. If you can’t pay attention as it is being swiped and ensure it is not double swiped.
  • Beware of people behind you while using ATMs. Some are there to read your PIN purposely. You can use your body to shield the PIN pad.
  • Do not conduct debit card transactions when you feel insecure or are in an unsafe place. Also, avoid distractions while using the ATM. Remember to take your card and transaction record while using the ATM.

Managing Your Accounts to Avoid Debit Card Fraud

Account management is important in reducing your vulnerability to fraud. Follow these precautions in managing your accounts.

  • Keep tabs on your statements and look out for suspicious transactions.
  • Ask your financial institution to reduce your daily purchase limits and withdrawals if they exceed your daily limits.
  • Regularly check your daily limits; financial institutions can change these limits without notifying you.
  • Keep tabs on your debit card accesses such as saving account, overdrafts, and lines of credit.

How Fraud Occurs

Fraud occurs when a fraudster gets access to the information on your magnetic strip and your PIN number. The PIN is not stored in the magnetic strip, so the fraudster has to use certain methods to generate it. These methods include:

  • Card Jam. There are several devices that can be you used to jam your card on an ATM machine. When this happens, a stranger offers to help you out by advising you to input your PIN number but your card still remains stuck. After leaving the stranger removes your card and having witnessed your PIN number being entered can now use your debit card to make unauthorized purchases or withdrawals.
  • Easily identifiable PINs. If you set your PIN based on easily identifiable numerals such as your date of birth, and you lose your debit card you increase your vulnerability to fraud.
  • Skim and Clone. There is certain equipment being used to collect debit card PINs and personal information. As you shop your card can be swiped twice; once to pay for your goods and a second time to send your information to the other card. A camera can also be used to capture your details. If you are a proven victim of such fraud, your losses would be covered by the financial institution
  • Bogus Machines. A bogus machine replaces the PIN pad and lifts your PIN information and issues a transaction receipt but does not send the transaction to the financial institution

What to do if you are a Victim of Fraud

  • Notify your financial institution immediately so that they can investigate.
  • Call the police and make an official report.
  • Beware that as a result of investigations your bank might not be able to refund you. Speak to the manager if you are not satisfied with the decision.
  • Research your rights and responsibilities.
  • You can contact the Financial Consumer Agency of Canada if you feel that your financial institution has not met the Canadian Code of Practice for Consumer Debit Card Services.

When are you Liable for Debit Card Fraud Losses?

Debit card scams are covered by your financial institutions in cases where the loss was a result of technical hitches, trickery, and theft or card expiration. However, in certain situations you are held entirely responsible for any losses on your debit card, for example:

  • Maintaining a copy of your PIN in proximity to your card
  • Giving out your PIN to someone
  • Failing to notify the financial institution when you realize you have lost your card
  • Failing to cooperate with the loss investigations

Debit card fraud scams are becoming increasingly common in the Canadian financial industry. And while falling victim to a debit card scam could happen to anyone there are steps you can take to protecting yourself and your accounts from these scams. Learn to be more careful and diligent when using your debit and follow the above steps, you’ll lower your risk of being caught is a debit card scam.

Caitlin Wood, BA avatar on Loans Canada
Caitlin Wood, BA

Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

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