Wednesday, August 27, 2014

A Note on Card Safety

My people have no tradition of proofreading.  —Ken White

There's been a lot in the news lately about malicious software invading stores' computer systems and stealing credit and debit card numbers.  A couple of people have asked me about how to be safe using credit and debit cards.  I wrote a big long piece about that.  After I read it, I decided it was mostly useless.  It can be boiled down to three rules:
  • Use your credit card sparingly,
  • Use your debit card almost not at all, and,
  • Check your accounts frequently.
Using your cards sparingly minimizes attack opportunity.  It is true that big, national organizations like Target and Neiman-Marcus have been compromised but it is also true that smaller organizations are often easier targets for the bad guys.  Each time you use that card, you potentially expose it to theft.  If you use a card for fast food or sundry purchases a dozen times a week, you've potentially exposed it a dozen times a week.  It really won't hurt you to carry some cash and make those small purchases with cash.  If you're worried about getting mugged, ask yourself how often that has happened and set the amount of cash accordingly.  Also, remember that not having cash won't keep you from getting mugged; it'll only limit your loss.  If you're worried about losing your wallet, remember where you keep those credit cards!

I carry about a hundred dollars and pay for nearly every small purchase with cash.

If you decide to use a card, and you have a choice, use a credit card, not a debit card.  If you use a credit card and become the victim of fraud, it's the card company's money that's tied up.  If you use a debit card, it's your money that is gone.  A $5,000 fraud on a credit card is bad because you'll have to wrangle with the card company about whether you have to pay that fraudulent charge.  A $5,000 fraud on your debit card is much worse because it's your money, not theirs, that's been stolen.  You will probably eventually get most of it back if the fraud is reported promptly, but while you are dealing with your bank, that money is not available to do things like buy food or pay your mortgage.

I use my debit card in exactly two places: my bank's teller machine and a store that gives me a discount for debit but not credit.  So, those are my only two potential exposures to fraud.

Speaking of teller machines, there's a threat other than malicious software.  It's the "skimmer," a device that attaches to a teller machine or credit card reader like those on gas pumps.  The card gets read twice, once by the skimmer and once by the real device.  So, your transaction works, but the bad guys now have the numbers, too.  You guard against skimmers by using the same teller machines, gas pumps, etc. as often as possible and noticing what they look like.  If something looks funny when you visit, go elsewhere and then check with your bank.

If your card number is used for fraud, the sooner it's reported, the sooner it can be stopped.  Early detection lets you limit the damage.  These days, we can check our accounts on line in seconds.  You should check every account at least weekly, and your debit card account daily.  It's especially important to keep an eye on that debit card.  Federal law limits your liability to $50 for fraud reported within two days.  After that, it's $500 until 60 days, then unlimited! (If you have so many cards that checking would be hard, you have too many cards!)

Reduce opportunity for fraud by minimizing your use of cards and reduce your personal exposure by using credit cards, not debit cards.If fraud occurs, find it early by checking your statements regularly.

Copyright © 2014 by Bob Brown

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A Note on Card Safety by Bob Brown is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.