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Debit card 101: Choosing ‘credit’ still risky

Paying at the pump with a debit card could spell trouble. And choosing the “credit” option does not turn your debit card into a credit card. Here's why.
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I was overwhelmed by the response to last week’s column about crooks who steal debit card numbers at gas pumps. It seems the warning about this relatively new and growing scam really hit a nerve with readers.

Technology makes it possible for thieves to snag account information and PIN codes when people pay at the pump. It’s called skimming. Debit card numbers are a prized catch because they are linked to bank accounts.

Armed with this information the bad guys can make a fake ATM card, go to almost any cash machine and take your money — hundreds, possibly thousands of dollars — before you even know it.

Avivah Litan, a fraud specialist at the research firm Gartner, tells me debit card fraud has risen much faster than other types of fraud in the last year or so. “The criminals are after cash and this is the most direct method to get into your bank account,” she says.

Is there a safer way?
Because debit card skimming is so difficult to spot, some police agencies now advise motorists not to use a debit card to pay at the pump. That prompted dozens of readers to ask if there’s a safer way to use their debit card when they buy gas. This e-mail came from Adrian:

How safe is it to use the debit card as a credit card, meaning don't enter the PIN. Do debit cards used as credit cards benefit from the same protection as credit card transactions?

No. Choosing the “credit” option does not turn your debit card into a credit card. Because the Visa and MasterCard logo are on most of these cards, many people are confused about that. Let me explain.

If you use a debit card you know there are two ways to authorize the transaction: with a PIN or your signature. Many retailers give you the choice.

Choose “debit” and you need to punch in your PIN. Choose “credit” and in most cases (other than pay-at-the-pump machines) your signature is required. What does this mean to you?

“Using your debit card with the PIN number just means the transaction is routed over a different network and it happens more quickly,” explains Gerri Detweiler with “But either way, the money still comes out of the account you have it linked to.”

Still the fraud experts I spoke to agree: It issafer to make a debit card purchase using the “credit” option (no PIN used) if the card has a Visa or MasterCard logo on it. That’s because the credit card company’s zero liability protection policy applies to this transaction.

“You get better protection, the thief doesn’t get your PIN and you’re not going to get money raided out of your bank account,” says Avivah Litan.

A widespread problem
The U.S. Secret Service confirms investigations into gas pump debit card skimming are underway in a handful of states right now, including: California, Nevada, Pennsylvania, Delaware and Washington.

Hundreds of victims in the Seattle area learned this summer just how easy it is to become a victim of debit card skimming. Their stolen account numbers were used to withdraw money from cash machines in several states during the Fourth of July and Labor Day weekends.

The skimmer scammers withdrew $600 from Jennifer and Darren Mundell’s checking account using an ATM in California. “I was totally blown away by this,” Jennifer said. “I had no idea they could even do that.”

Here’s the amazing part of this story. Detectives say the debit card numbers were skimmed back in August of 2007. Yes, the thieves sat on that information for a year before using it.

“We are looking at a sophisticated, very well-organized group of individuals who did this,” said Jason Visnaw, a detective with the Puyallup, Wash., Police Department. He says the total loss could reach $500,000.

The Mundells got their money back from the bank. But they now pay with cash at the gas station. For them, the days of using their debit card at the pump are over.