forensic accounting services – fraud 101, employee embezzlement, identity theft » debit card

Another Great Reason To Loose Your Bank Debit Card: Monthly Fees

Steve Pedneault — Thu, 27 Oct 2011 17:31:28 +0000

A colleague business owner noticed a transaction on his bank account that wasn’t appropriate. A check had cleared for an amount much too large for the dollar range of checks his company typically writes. Within minutes he identified that the check had been altered and cashed, for approximately 1,900% more than it was originally written. Consistent with requirements, he contacted his bank and alerted them to the problem. Later that same day he was at the bank completing and signing an affidavit. Once completed, he needed to get the funds back into the company’s account to pay bills.

That occurred in February 2011, and he is still waiting for the bank to return his funds.

More and more banks are shifting away from taking the hit from fraudulent activity, moving towards sharing the fraud loss with the customer. Some banks now refer to fraud as a “shared responsibility” between their financial institution and their customer. That makes sense, as account holders should have measures in place to minimize their losses from fraud. However, fraud can still occur even with the best of controls.

In the latest update on debit cards, Bank of America and other banks recently announced they will begin charging bank debit card users a monthly service fee. According to news reports, Bank of America plans on charging $5.00 per month for the privilege of using a bank debit card, while other banks are planning on charging lower amounts. (here’s the URL to a good article – http://www.nytimes.com/2011/09/30/business/banks-to-make-customers-pay-debit-card-fee.html).

Bank debit cards are readily targeted and sought by fraudsters as they provide direct access to victims’ funds. If successful with your account, you, the victimized debit card holder, will be at the mercy of your bank to replenish your funds into your account.

My position on bank debit cards has remained unchanged. Save yourself the aggravation and now any monthly fees. Loose your debit card, and return to a classic credit card along with a stand-alone ATM card.

And as always, remain vigilant in monitoring your bank and credit card statements and activity regularly.

Another day… another friend is the victim of a financial crime.

Steve Pedneault — Mon, 04 Oct 2010 18:01:02 +0000

Another day, another friend with a personal financial crisis. The latest, a friend who had unauthorized activity perpetrated through illegal access to his debit card. I received this latest request for advice and assistance from a friend through FaceBook, of all places. Turns out someone obtained his debit card information, and withdrew the funds from his checking account. He was already working with the banks to get his funds returned, as well as obtain a new debit card.
My advice – loose the debit card. Don’t let them send you a new one.
Instead, have them issue you a traditional ATM card, and use the ATM card along with a traditional credit card going forward. When (and I meant to say “when” and not “if”) someone gains access in the future, the most they can do is charge things on his credit card that he will never pay. He will dispute the charges, get a new card, and otherwise have no financial loss. With the ATM card, he can gain access to funds when needed, but without the PIN, the perpetrators have nothing. Even with the PIN his exposure is the maximum an ATM will allow to be withdrawn, typically $500.
Minimize your risks to these issues which are beyond your control by eliminating your debit card. It will better protect your bank balance as well as minimize any negative impact to your credit report.

Debit Card Usage – Great Article

Steve Pedneault — Sun, 21 Mar 2010 23:41:33 +0000

Skimming, the act of gaining unlawful access to card holder’s information, is becoming much more prevalent. Identity thieves getting much more brazen regarding how and where they skim your credit and debit card information. Be vigilant.

Time and again I have posted regarding the use of a credit card over a debit card. The main issue is that with your debit card, when fraudulent access is gained to your account, your funds are gone.

I found this article tonight that does a great job highlighting some of the issues occurring with debit and credit cards, and identifies ten (10) contexts where the use of your debit card would likely prove to be a real issue for you.

Here it the link to the article. You may have to paste it into your browser.

http://finance.yahoo.com/banking-budgeting/article/109125/10-places-not-to-use-your-debit-card?mod=bb-checking_savings

Just When You Thought It Was Safe… To Buy Gas.

Steve Pedneault — Fri, 08 Jan 2010 02:30:26 +0000

Credit and debit card skimming has been happening for several years now. It has evolved over time from dishonest employees skimming your cards at your favorite stores and restaurants, to more sophisticated means – such as attaching skimming devices to ATM machines and the lock systems that allow you access to the ATMs.

It is well known that purchasing gas is one of the first things someone does with a stolen or fraudulent card, because typically there are no cameras and human intervention over the use of the card. It either works at the pump to buy gas, or it doesn’t. If it works, a minimal amount is purchased, and then the card is used for the real fraudulent purchases.

Skimming moved into the world of gas pumps, and appeared in articles as far back as 2008. Identity and credit thieves attach card capturing devices into gas pumps, capturing each customer’s credit or debit card information, and transmit the card information via wireless/cellular to a nearby conspirator receiving the information on their cell phone – each customer unaware their card has been jeopardized, as the devices are installed inside the pumps.

Skimming has become so sophisticated that card information is available to the thieves almost instantaneously to their unlawful skimming, commonly transmitted to a nearby cell phone.

In a recent ad I noticed yesterday, Apple’s iPhones now have an app available to swipe, capture and charge credit or debit cards right through the iPhone.

Provided it hasn’t already been discovered and used, it’s just a matter of time that the thieves will migrate to this technology, capturing the unsuspecting customer’s card information via a swipe on their iPhone, and simply press the send button to transmit the stolen information to their co-conspirator making up fraudulent cards using customer information.

Isn’t technology just wonderful?