“Debit or credit?” Seems like such a trivial question when you think about it. After all, it’s my money regardless of which account I am really using. For those of us in the security industry, we know there is a huge difference, and that there are security implications that consumers should contemplate when purchasing goods with either debit or credit.
As we learned over the past year from security breaches in chains such as Michaels, Subway and Lucky’s, hackers have deemed retail merchants and restaurant chains as a weak link. In these instances valuable cardholder data and even real cash was stolen. What some consumers may not know though is that the ones that used their credit cards were better protected than those that used their debit.
When credit is used, fraud recovery and fraud protection laws benefit the consumer. In terms of fraud recovery, it is easier for credit card fraud victims to recover fully, as opposed to those that use debit. When a retail system is compromised, and criminals use a consumer’s credit card, all that person has to do is have the charges removed from their bill or refuse to pay for the fraudulent purchases. On the other hand, when debit card information is stolen, including PIN numbers and other access codes, purchases can be made and cash can be immediately withdrawn from checking accounts. The money in one’s checking account is charged, and the consumer must then get in touch with their bank, have a series of calls with representatives, submit paperwork and sign fraud documents. Only then is there potential for the stolen money to be reimbursed.
In addition, consumers have protection under Federal law through The Fair Credit Billing Act and the Electronic Fund Transfer Act. These laws give credit card holders better safeguard against fraud than they do for debit card users. When cards and accounts are compromised, a credit user is responsible for up to $50 in payment. Debit card holders are accountable for up to $50 in payment, however that is only if the fraud is detected and reported within two days. If the unauthorized and fraudulent activity is reported after two days of its occurrence, the debit card holder could be accountable for up to $500 in out of pocket fees. For those that use debit cards frequently, it can provide some peace of mind that most of the time, all card types generally have zero liability guarantees from banks. However, as I’m sure you may have seen before, those policies can be altered at any time unbeknownst to the cardholder until they receive an update letter in the mail that guidelines have been changed. This being the case, it is the safer for the consumers to understand how they are protected by law, and to go by those regulations.
So consumers, next time you are asked debit or credit, consider going with the credit option. You will be thankful if anything were to ever happen at your local retailer that compromised their data security system.