Just prior to the week of Christmas, an estimated 40 million debit and credit card accounts were breached at Target, leaving millions of people wondering how they would be affected by the massive debacle. In the mean time, financial and security experts have been advising consumers about what to do, if they’ve become a victim or are concerned about their data. While much of the advice is sound, be aware of frauds and profiteers looking to take advantage of your fear.
The first thing to note is that this latest breach is not an unusual occurrence. There were approximately 600 breaches that occurred in 2013 alone. The attention the Target breach drew made it newsworthy, but in the past few years there have been hack jobs that have affected significantly more consumer accounts. TJX Companies, for example, was hacked in 2007 effecting 94 million accounts. Heartland Payment Solutions, a credit card processing firm, had 130 million customer accounts compromised back in 2008. The list goes on across a wide spectrum of companies and industries.
Credit Card vs. Debit Card Losses
Don’t fall for the hype that credit cards are more vulnerable than debit cards. Fraudulent use of a
credit card is essentially stealing from the bank; while unauthorized debit card purchases is the theft of your personal savings. In either case, an investigation will be required before any of your funds are recovered. Debit account losses require a greater amount of time to investigate and tie up your personal funds in the process, while credit card losses are much quicker to be rectified.
In fact, credit cards offer a much greater degree of protection. Federal law limits card holder’s liable for no more than $50. In addition, Visa, MasterCard, Discover and American Express have ‘zero liability’ policies, so you’ll never lose a penny to credit card fraud. Debit cards carry the same maximum liability with one caveat – the banks must be notified within two days. Go past that deadline and you’ll be liable for up to $500 and potentially lose your entire deposit if you fail to report the fraud within 60 days of receiving your statement. Note: Visa and MasterCard promise “zero liability” on debit transactions if the transaction is authorized with a customer signature rather than a PIN.
In the case of the Target breach, some banks even took the unprecedented move to limit debit card spending and withdrawals. This step frustrated many shoppers using a debit card during the holiday rush, while credit card users were unaffected.
Limited Protection of Credit Card Monitoring
Another piece of advice to avoid is from companies that claim that they can fully protect you from becoming a victim. This is pure and simple false advertising. While many free services can offer you some benefit in fighting fraud, in cases where a monthly fee is required, the benefits are often exaggerated. Fraudulent use of your credit card does not trigger an alert on your credit report. And debit card transactions aren’t even reported to the credit bureaus. A credit freeze is only an effective tool after you’re account has been compromised. It’s worthless in preventing a hacker from gaining your account information via a breach. Don’t be fooled into paying for protection unless you first understand that there is no 100% foolproof method of doing so.
All merchant and retail outlets are vulnerable to hackers. The larger national chains are only as good as the security measures they have in place, making the threat universal in scope. Granted that they have more revenue to put those measures in place, keeping them up-to-date against the latest schemes and practices of hackers is an ongoing effort that requires diligence.
The bottom line is that consumers need to put their own security measures into practice and be aware of changes in technology, as well. Being prepared to act when there’s a questionable threat is just as important as how retailers handle breaches in their systems. When both parties cooperate, financial institutions and consumers are likely prevent these threats from going viral.