Your ATM Card and Identity Theft

Man using an ATM
••• Marc Romanelli / Getty Images

For years now the line has been blurred between credit cards and ATM cards (or debit cards). Although they work the same at the store's Point-of-Sale machine (POS) and your bank machine, or automated teller (ATM), from the identity theft perspective there's a huge difference, although both types of cards can be stolen by "skimming". Just because your card has a Visa or MasterCard logo in the bottom corner is no guarantee that your money is safe.

A Costly Difference

When you swipe a credit card at the grocery store or gas pump, the credit card company pays the bill and lets you pay them back over time. When they came out with the idea, it was a great way to protect your money, because you didn't have to carry cash anymore. If your credit card was stolen, you could just get another one. Of course, today it's a completely different story. If someone steals your credit card they can rack up a huge bill and you will probably spend a lot of time and energy trying to clean up the mess. Otherwise, you may get reported to the credit reporting authorities (or CRAs) like Experian, and have a hard time getting credit in the future.

But the important thing to remember about credit cards is that when you use them, you are making a promise to the credit card company that you will pay them. In other words, you aren't spending your money yet.

When you swipe your debit card, you are giving the gas station or Wal-Mart access to your bank account so they can take the money for your purchase. Once your money is gone, you may have a hard time getting it back. In fact, once you report your ATM card has been stolen, it can take two months to get your money back. And that only if the bank's investigation goes your way.

Low Tech ATM Scams

Some identity thieves like a low-tech approach, trying to steal your ATM card by putting a piece of plastic or glue in the card slot. This can cause the ATM to repeatedly ask for your PIN, making it easy for someone to look over your shoulder while you're typing it in. With the glue in the card slot, the card may get stuck in the ATM. The identity thief is usually standing behind you waiting to use the machine. When they see the trouble you're having, they become very helpful and say something like, "This machine always does that. Just type in your PIN three times and it will release your card." Of course, this doesn't work, so they offer to watch the machine while you go get help. As soon as you're out of sight, they will pull a pair of tweezers or needle-nose pliers out of their pocket, snag your card, and go shopping.

Obviously, if you are having trouble with an ATM machine, be cautious who you trust if you have to walk away from it. A security guard or police officer is usually your best bet.

High-Tech ATM Scams

Card "skimming" is a popular way for identity thieves to get your ATM card information. Sometimes they put a device on the ATM machine itself. The skimmer looks like part of the machine and can be tough to spot. When you put your card into the machine, it passes through the skimmer first. When your transaction is done you get your card back none the wiser. The identity thief will collect the skimmer later, and your card number with it. Or, the skimmer may have a miniature Bluetooth device. If this is the case, the identity thief doesn't even have to collect the skimmer but just get close enough to download the information. Recently, skimmers have been found on gas pumps as well.

Common Sense Tips

  • Don't trust anyone else with your card. If you hand it to a cashier, waiter/waitress, or customer service rep, keep them in sight. And remember, if you let someone else use your card and they spend more than you wanted them to, it will be almost impossible to get your money back from the bank. Even credit card companies will make you pay for an authorized user "overspend".
  • Don't trust a stranger. Good Samaritans still exist, but many identity thieves will pose as someone willing to help in a time of need.
  • Use a credit card instead. It's a bit easier to tell the credit card company you are going to pay a bill that it is to get your money back from the bank, even with the laws that are in place to protect consumers.
  • Use cash instead. After all, if an identity thief gets away with money all you have lost is the money she took. Most places still take the money and you usually don't have to have an ID.
  • Look around for cameras. If you can see a camera where you are using your card, chances are good a would-be identity thief will be on film placing a skimming device. This doesn't guarantee safety, but identity thieves tend to be camera shy for obvious reasons.
  • Use trusted ATMs. Your best bet is to use the machines at your bank. Another bank is your best second choice. Use stand-alone ATMs only when you have to.
  • Your phone is your friend. Storing the phone numbers for your bank and credit card companies on your phone lets you contact them immediately when something happens to your cards. Communication is the key to dealing with your bank if it happens to you.