Stolen Debit Card Risk

Are you Liable? Do Banks Cover Theft?

Peter Dazeley / Getty Images

A stolen debit card is worse than a stolen credit card. It’s crucial to act fast for several reasons:

  1. A debit card is linked directly to your checking account, so unexpected charges that drain your account could cause you to miss important payments like rent, mortgage, and insurance premiums
  2. Your liability for a stolen debit card is greater than your risk with credit cards (unless you report the problem soon enough)

    Whether your card has been taken or you still have the card but the number has been stolen, the process is the same – but you have more time to prevent losses if you still have possession of your card.

    Contact Your Bank

    The most important step is to contact your bank – immediately. Let them know that your debit card has been stolen or that you suspect fraudulent use of your debit card number. The sooner you do this, the less risk you’re exposed to. Federal law protects you from fraud and errors in your account, but only if you meet certain criteria:

    • If you notify your bank before the card is used by thieves, you aren’t responsible for any charges
    • Your loss is limited to $50 if you notify your financial institution within two business days after learning of the theft
    • After that, your loss could be as high as $500 as long as you report within 60 days of your account statement being printed
    • After that, you risk unlimited loss and responsibility for charges in your account

      If you still have your card but somebody stole your card number, you have 60 days to report any fraudulent transactions and have the bank cover the losses. After 60 days, you’re responsible for the charges.

      Call your bank using a phone number you find on your bank’s website or via your bank’s mobile app.

      Banks generally take these reports 24/7, so don't wait until Monday. After verbally notifying your bank, you may need to follow up with a written report – this is essential to protect your rights – failing to do the paperwork (yes, it’s a pain) could mean you failed to “report” the theft.

      In addition to federal law, your bank or card issuer might offer “zero liability” protection (which might be better than the law requires).

      Credit Card Risk vs. Debit Card Risk

      Credit cards are safer than debit cards, and they’re probably a better choice for everyday spending. Every time you use your card, you open up the risk of your card number being stolen. With a lost or stolen credit card, you’re only liable for up to $50 of unauthorized charges (just like with debit cards, you’re not liable for charges that hit your account after you report the loss).

      What’s more, your debit card pulls funds directly and immediately from your checking account. With a credit card, on the other hand, fraudulent charges just increase a “hypothetical” account balance that you have an extra 30 days to pay off. When your debit card is stolen, you’ll have a harder time paying bills and making important purchases because your money is gone.

      Once you notify your bank of the theft, they have up to 10 days to investigate your claim and temporarily (until an investigation is completed) replace those funds in your account. Living without your money for 10 days might not be feasible. If you’re unable to make payments, you’ll face additional late charges and insufficient funds charges from your bank. Add those fees to the amount of time you need to spend cleaning everything up, and a credit card sounds especially appealing.

      That said, a debit card can still be safer than cash: if a pickpocket gets a wallet with cash, you’re never going to see that money again. Using a stolen card is risky, and most thieves won’t cross that line – plus you have the ability to get fraudulent charges reversed if your bank will cover them.

      How Did They Get My Card Number?

      If you still have your card, you may wonder how thieves are using it for online purchases – and even withdrawals from ATMs.

      Debit card numbers get stolen every day, and sometimes you’re not even involved.

      • Hackers can steal card numbers in large data breaches when they break into retailers’ computer systems
      • ATM skimmers and pocket skimmers grab your card number, and hidden cameras can pick up your PIN as you type it in
      • Dishonest employees almost anywhere can copy down your card information

      To protect yourself, avoid using your debit card at any merchant you’re not familiar with. Again, credit cards are safer. Any buffer you can put between your checking account and a thief is helpful (payment services like PayPal can also do that for you). Use your chip card – and insert the card instead of swiping – to reduce the chances of your information being stolen.

      If you really like debit cards, consider a prepaid debit card for shopping at places where your number could get stolen. Those cards don’t require any credit check, and thieves can only steal what you load onto the card.

      Check your account statements regularly. Unfortunately, it’s not safe to let things run on autopilot. To make it easier, set up text or email alerts in your checking account to notify you of activity in the account. This helps you report the theft to your bank sooner, which minimizes your liability.