Credit or Debit: Which Is a Better Choice for Consumer Protection?
According to a report from the Federal Reserve, Americans conducted more than 111 billion “non-cash” transactions in 2016. Among those transactions, about 74 billion were done with debit cards, compared to just 38 billion carried out with credit cards.
And yet, as a recent report from WRAL Raleigh-Durham suggests, “using your credit card more often can help protect your money,” making credit “a smarter choice” than debit, in many circumstances.
Why the difference in consumer protection standards? As WRAL puts it (emphasis ours):
“With a credit card theft, the card issuer fights to get its money back. However, with a debit card, you fight to get your money back.”
As the report goes on to explain:
“Users should know that, with a debit card, the money is gone — until and if — it is refunded to your account. If you notify your bank within two days, your liability is capped at $50. Between two and 60 days, you could lose up to $500. If you wait more than 60 days, the account holder will lose the entire amount.”
On the other hand, with credit cards, users can only be held liable for up to $50 in charges if the stolen card is used in person, with many card issuers willing to waive these costs. If a thief were to use stolen card information by phone or the Internet, the cardholder generally has no liability, under the law.
WRAL spoke with one consumer who lost $4500 due to fraudulent charges to her account, as a result of her debit card information being stolen. Her bank, she says, “did not guarantee that [she] would get reimbursed,” while local law enforcement also had its hands tied.
In all, this story is a vital reminder to consumers everywhere to take precautions when it comes to safeguarding their most personal financial information from thieves and fraudsters.
On the one hand, consumers may benefit from opting for more credit card or cash transactions, and by taking steps to protect their personal information when making e-commerce purchases or conducting any of their banking online.
At the same time, Sgt. Haywood Alexander, head of the Raleigh Police Department’s fraud unit reminds WRAL readers that bad actors can “take a picture of your card or swipe your card through a handheld reader that’s no bigger than your hand,” or collect information via “skimmers,” which are “devices used to secretly swipe credit and debit card info wherever people use cards,” such as gas stations.
For more information and insights on the best practices to adopt if your personal information is lost, stolen, or compromised, the FTC and CFPB offer several resources and guides for consumers, including those available here and here.
And if you’re interested in viewing the full WRAL story – including a video and additional resources – you may do so here.
Other Fraud Articles of Interest:
Led by Attorney Michael D. Finn with 50 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don’t hesitate to drop us a line with any questions or concerns.