Credit card fraud was discussed some time back but along similar lines and perhaps even more serious to the card holder, is debit card fraud. Although the piece of plastic used in both cases may be similar, stopping the use of credit cards is a common advice offered to debt-ridden consumers. As a result, if such consumers pay heed, then debit cards become the preferred choice for electronic transactions (unless the consumer goes the route of prepaid credit cards).

In order for a thief to use a debit card in a fraudulent manner, he/she would have to gain access to the PIN associated with that card.  To help combat fraud, chip technology helps in preventing the creation of counterfeit cards due to the embedded microchip. In addition, the per-day limit placed on withdrawals through ATMs is a boon. Nonetheless, it is useful to be aware of fraud prevention and remedy.

Common Fraud Methods

Card Jam. A thief may disable an ATM using any tool that will help them get the job done. An unsuspecting client may find their card jammed and a supposedly helpful stranger will offer the suggestion to try the PIN a few more times (while they memorize it). The panic environment is liable to make the client forget the basic security measure of covering the PIN. Once the client leaves in despair (probably after calling the bank’s Customer Care Line or wanting to do so after getting home), the thief retrieves the card and uses it to withdraw money using the PIN entry they observed.

Skimming. Typically, this type of fraud may involve a cashier swiping the card through a hidden device to obtain the details from the magnetic stripe (for counterfeiting later) while a camera records the PIN entry or installing a secondary reader in an ATM machine to accomplish the same.

Pickpocketing. This is probably the oldest fraud. A thief may watch the PIN being entered, distract/deceive the client and steal the debit card.

Protection against Fraud

Many of the tips offered in the post about credit card fraud are valid here as well. Some key additional ones are included below and a longer list is available here.

  1. Choose a PIN that is not based on obvious information (birth year – self or spouse, home phone or cell phone number, last 4 digits from credit card number, etc.);
  2. For point of sale transactions, never let the card out of sight and shield the PIN when entering it;
  3. Check your statements regularly to detect discrepancies promptly; and,
  4. To protect against the worst happening, set a lower cash withdrawal limit.

Post-theft Actions

If your card is stolen or if you detect fraudulent transactions on your statement:

  1. Notify the respective financial institution and ensure that they begin an investigation;
  2. File a report with the police; and,
  3. If the financial institution does not offer a resolution within their stipulated period or provides an unsatisfactory resolution, research their dispute resolution process and proceed to a higher authority including the Ombudsman for Banking Services and Investments.

Client Liability

A client has some responsibilities and failure to fulfill them will result in them bearing the losses. An example is not taking required precautions such as avoiding the use of telephone numbers, birthdays, etc. when creating a PIN, which may limit the liability of the financial institution. A full list is available on this Office of Consumer Affairs page.

If you have been a victim of debit card fraud, what steps did you follow to claim your losses? Do you have any additional tips for readers?

About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.


  1. Cold Truth on January 24, 2014 at 10:43 am

    I’ve had my credit card details stolen twice in the past year. In both cases it was respectable restaurants that take the card from the table and come back with the receipt to sign. Even nice restaurants can have staff of ill-intentions.

    The tip about “not letting the card leave your sight” is important. If they wont’ bring the wireless POS unit to the table, get up and go with them back to the register. Its a pain in the ass but, as in my case, ‘Fool me twice, shame on me.’

  2. Evan on January 24, 2014 at 12:05 pm

    I’ve always wondered about the PIN thing. Is a thief going to know what year you were born or your phone number? If they do, they’re probably a friend/relative or acquaintance in which case you’ve got bigger issues.

    And the whole thing about changing your PIN/password often. Generally they’ll use your skimmed info immediately. Unless you change your PIN every 30 mins, it seems pointless.

  3. Jason on January 24, 2014 at 2:49 pm

    It happens a lot here in Montreal folks. Shield your PIN would be the best advice. It seems a little loopy to see someone do that (shielding) but they have been robbed before. So have I!

  4. Campbell on May 22, 2014 at 12:46 pm

    Great information
    I would like to add that card replication and number theft are also getting more common in addition to skimming

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.