I haven't seen a debit card that didn't have the same buyer protection for like 15 years. Does that still exist?
I don't know of any that don't have fraud protection. I didn't lose a dime any of the four times my information was stolen.
The only times that anyone attempted to use the cards was the compromise previous to the most recent compromise (the Foodtown one). The first attempts were successful. Someone successfully made two large purchases on my PayPal Business Debit card, which typically has several thousand dollars available at any given time. I caught the purchases because PayPal emails me every time the card is used, and I get those emails on my BlackBerry within seconds. I called PayPal and they canceled the card and immediately issued a temporary credit.
The second attempt my credit union caught by whatever methods they use to ferret out unusual purchases. They declined the charge, so there was nothing to credit. But they did cancel the card and stamped me out a new one with a different number. They also canceled my business debit card and issued a new one, just to be on the safe side. The cards were waiting for me at the branch within minutes of the call.
The problem with debit cards is that although you're protected against fraud (at least by any issuer I know of), the money stolen by fraud would be your money, not the banks; and you would have to wait for them to give it back to you. I don't know if they're required to give you a credit pending investigation, but if not, it could be a real hardship if the account that got compromised was the one you lived on.
You see, these investigations are not open-and-shut affairs. In my case it started with the County Sheriff, who took a great deal of information. This included current printouts of the activity on
all of my cards, not just the ones that were compromised. They then turned this information (along with that of all the other good citizens of Sparrow-Fart whose cards had been compromised) over to the State Police Cybercrimes Unit, who in turn got the Secret Service involved when it became apparent that the hack had occurred upstream at the processor, not at the POS machines.
I forget exactly how long it took to identity the source of the breach, but I think it was about a week or two. It didn't affect me other than inasmuch as I had to have all my cards re-issued, which was a major pain in the ass, but didn't cost me anything. The only successful charges were against the PayPal debit card, and PayPal immediately issued me a temporary credit. That credit became permanent once the investigation was completed.
So frankly, I think the hatred of debit cards is a bit exaggerated. No one I know in the whole town lost a dime in that debacle, and almost everyone in town got caught up in it because we all used that supermarket. But yeah, if money's going to be stolen, I'd rather it be the card issuer's money than my own; so yeah, I agree that credit cards are
marginally safer. I just think the fear of debit cards is a bit over the top.
Look, debit cards are very profitable to institutions. They get to charge the fees without lending money to the cardholders, so their risk is limited to fraud.
One of my issuers, Fidelity, even refunds the ATM fees on the debit card associated with my Cash Management Account, and provides all sorts of purchase protections, extended warranties, and so forth on products I purchase with the card. They really do want people using their plastic.
Debit cards being as profitable as they are to issuers, the last thing the issuers want is for debit card holders to be afraid to use them. It's as close to free money as they can get. They're going to do whatever they can to inspire cardholders' confidence.
But in the end, it's still the cardholders' money that's going to be stolen if the card is compromised; so yes, credit cards are safer in that regards. But I do think that the risk of using debit cards is way overblown. For all the times my information has been stolen, I've never lost a dime. Perhaps part of the reason is that all the compromises were confirmed breaches, so there never was any suspicion against me. But whatever the case, I didn't lose any money.
Rich
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