Debit card fraud spikes



BAR HARBOR — Dozens of customers at several area banks have reported fraudulent activity on their debit cards this spring.

Such incidents can be a headache for customers who must replace debit cards and merchants who may be liable for fraudulent charges. It also is a challenge for banks and law enforcement as they try to stay ahead of the problem.

Financial institutions contract with third-party fraud detection companies, according to Tammy Plummer, chief information officer and executive vice president at The First. “All transactions for all of their customers go through these engines that rate transactions for risk. If they suspect a transaction might be fraudulent, they will block the card.”

The fraud-detection procedure is a delicate balance, she said, between preventing illegal activity and flagging legitimate transactions. “We err on the side of blocking, which sometimes inconveniences a customer,” Plummer said.

The fraud detection company contacts customers via phone call, text message and/or email, to ask them whether the suspected transactions are legitimate. The customer may reply using any of those methods to say whether the charges are legitimate or fraudulent.

“As soon as you reply, your card is unblocked” in the case of a legitimate transaction,” Plummer said. If the flagged charges were indeed fraudulent, the customer must go to a bank branch and get a new card.

Local police departments do not usually get calls about these incidents, Lt. David Kerns of the Bar Harbor Police Department said, because the banks respond quickly.

“The Secret Service is the federal agency that works on debit card crime,” Plummer said. “There’s not a lot the local police can do. The Secret Service would engage local law enforcement if needed as part of an investigation.”

Card numbers may be compromised in a number of ways, she said. Banks recommend changing passwords often for online activity, using anti-virus or malware protection and using the passcode lock on mobile devices.

Physical devices called “skimmers” that collect card numbers were found earlier this year at ATMs in Belfast and in Brewer. Skimmers install a fake device over a real one and collect card data from unsuspecting users.

“If you’re using a reader that’s in an unattended area, tug on the machine gently where you put your card in,” Plummer suggested. “If there’s a skimmer or something that shouldn’t be there, it will feel a little loose.”

It also can help to cover your hand while entering a PIN to prevent it being video recorded.

The recent introduction of debit cards with a microchip, called EMV (for Europay, Mastercard and Visa), smart cards or integrated circuit cards was intended to reduce some debit card fraud, Plummer said. An illegally obtained card number may be used for fraudulent purchases online, or the perpetrator may use the number to create a fake card with a magnetic strip. In-person purchases with such fake cards are called “card-present fraud,” she said.

“The chip that’s in your card now makes it harder for the fraudsters to create a fake plastic card. But the percentage of merchants that accept EMV cards is still pretty low. If you’re still having to swipe your card, it’s still potentially going to be compromised.”

The customer is never liable for fraudulent debit card activity, Plummer said. “If you say you had fraudulent transactions and that pans out, we give you your money back.”

Before the EMV cards, a fraudulent charge was always charged back to the bank. Under a rule change that VISA implemented in 2015, if a card-present fraudulent charge is made by a merchant that does not accept EMV, the merchant may be liable for the amount, rather than the bank.

 

 

Liz Graves

Liz Graves

Reporter at Mount Desert Islander
Former Islander reporter and editor Liz Graves grew up in California and came to Maine as a schooner sailor.

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