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Debit Card Fraud Soaring

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Authorities report sharp rise as card use grows

By Chris Levister –

Two days before Thanksgiving, this year 17-year-old Kechia Gipson bought more than $365 dollars worth of fresh turkeys she never saw for people she never met at a Tijuana Baja California Mexico grocery store she’d never stepped foot in.

The Highland teen received a call a day later from her bank about suspicious charges on her debit card.

Did she buy the turkeys? Was she an angel celebrating Thanksgiving by donating turkeys to the poor? Or was she a victim of debit card fraud?

“I didn’t buy those turkeys,” she insisted. “I’ve never even been to Tijuana.”

Gipson destroyed her debit card. The bank returned the loss to her account and replaced her card within two business days.

However, the funds weren’t replaced in time for Gipson to buy a bus ticket to Oakland where she’d planned to spend Thanksgiving with her family.

“I ended up getting the ticket money from my Mom who had to borrow it from a friend,” she said.

Gipson’s saga is increasingly common.

For the roughly 185 million U.S. consumers with debit cards the May 2011 security breach at arts-and-crafts retailer Michaels Stores offers yet another cause for concern. The reports allege that the thieves did more than simply steal debit card information from stores in 20 states they used it to take money from customers' bank accounts, According to the National Identity Theft Resource Center, as more consumers begin to use their debit card in place of cash, they put themselves at risk for having their information stolen.

Recent studies indicate that 80% of consumers own a debit card, and more consumers use debit cards than credit cards, cash or checks. As a result, debit card fraud is also on the rise up by 30% since 2008 and becoming increasingly sophisticated.

Local authorities say Gipson used her debit card November 22, 2011 at a San Bernardino restaurant where someone apparently captured secure information from the card’s magnetic strip using a process called skimming.

Skimming is the practice of capturing a debit customer's card information by running it through a machine that reads the card's magnetic strip. Those machines are often placed over the real card slots at ATMs and other card terminals.

Would you give a thief direct access to your bank account? Long Beach security consultant Bill Fletcher warns you may be doing just that by regularly using your debit card.

Debit cards may look identical to credit cards, but there's one key difference. With credit cards, users who spot fraudulent charges on their bill can simply decline the charges and not pay the bill.

On the other hand, debit cards draw money directly from your checking account, rather than from an intermediary such as a credit card company.

Fletcher cites the example of a Colton woman who lost more than $400 dollars from a gas station payment terminal.

Late one night she bought $57 worth of gas using her debit card. She witnessed a normal transaction. "What she didn’t see was the guy sitting across the street with a laptop and an antenna capturing all of her bank information” said Fletcher. “Her account had been debited before she pulled into her driveway less than 5 miles away.”

Fletcher says gas stations and other outdoor payment terminals are hotspots for debit card fraud.

“There’s very little supervision. Even with good security lighting, thieves with a small high powered camera can easily capture PINs and other secure data giving them direct access to an unsuspecting customer’s account.”

Fletcher says while shops, restaurants and gas station terminals pose a danger for debit card users, online is the No. 1 place where consumers should not use their debit cards.

Authorities say the Internet is ground zero for debit card fraud.Thieves are becoming more sophisticated as seen in recent high profile breaches that included the use of ‘cookies’ or malware on a user’s computer. Cookies can be used for, verifying identification of a user session, user's preferences, shopping cart contents, or anything else that can be accomplished through storing text data on the user's computer. Cookies can also be stolen by hackers to gain access to a victim's web account.

Debit card fraud losses incurred by banks hit a record $822 million in 2009 according to the latest estimates from American Bankers Association, due to mostly stolen and counterfeit debit cards.

To protect themselves and their customers, banks monitor accounts for fraud, Fletcher said. They look for transactions that are out of character.

Online merchants are deploying more sophisticated monitoring and fraud detection systems to protect customers.

Still says Fletcher the bad guys are often one step ahead of the game.

He says it’s important for consumers to be aware of debit card fraud and know which actions to take to avoid becoming a victim.

“Be very careful where you use your debit card. Use common sense. If something about the transaction seems suspicious. It probably is,” Fletcher said.

The best way for people to protect themselves is to monitor their transactions using online banking, or monitor debit transactions by phone he said.

If customers notice a suspicious transaction they should report it immediately. For people such as Kechia Gipson not using their debit card is not an option.

“I use it for just about all of my purchases. I don’t like to carry cash. It’s too dangerous.”

Gipson admits she’s paying a lot more attention to her debit card account. As for the bad guys who stole her money to buy those Thanksgiving turkeys, the teen hopes there was an angel among them.

“I just pray they donated them to needy families who couldn’t otherwise afford them. That would make me happy.”

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