Debit: More Risk Than Credit

Debit and Credit cards are both susceptible to the same kinds of fraud: stolen cards, stolen card numbers, skimming, identity theft, etc.

What makes Debit riskier?

  • Debit Cards provide access to the cardholder's personal bank account
  • Debit Cards do not carry the same protections as Credit Cards

The Truth in Lending Act (TILA) limits cardholder liability to $50.00 if a Credit Card is lost or stolen. In addition, the creditor has 90 days to investigate any disputed charges, and during that time period the cardholder may withold payment on the disputed item.

Debit Cards fall under the Federal Electronic Fund Transfer Act:

  • The cardholder must notify their bank of any fraudulent activity within 2 days.
  • If the bank is notified within 2 days, cardholder liability is limited to $50.00.
  • If the bank is notified after 2 days, cardholder liabilty increases to $500.00.
  • If the bank is notified after 60 days, cardholder liability is unlimited.
  • During the investigation period, payment cannot be withheld (and in fact the funds were most likely pulled from the cardholder account at the time of the fraud regardless).