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Debit card fraud: How to get a refund on a fraudulent transaction

If you've fallen victim to debit card fraud, you may be eligible to receive a refund. Learn about types of fraud and how to prevent it.

What should you do if you’ve become the victim of debit card fraud? While provider policies can vary, you’re often entitled to a refund if there are unauthorized transactions on your debit card. Keep reading to learn the steps you can take to get a refund, and how to prevent fraudulent charges in the future.

What is debit card fraud?

Debit card fraud occurs when an unauthorized transaction is charged to a debit card. Debit card fraud happens either when something is purchased or when money is withdrawn without the cardholder’s permission. These fraudulent transactions can occur when cards are lost or stolen. It’s also possible for scammers to scan your debit card’s magnetic strip to get your card’s information, which they can only use if they also get a hold of your PIN number.

Types of debit card fraud

There are several different ways a fraudster could get your debit card information:

  • Skimming device. The scammer can attach a skimming device to an ATM, gas pump or anywhere else you swipe your card and steal information from your card’s magnetic strip.
  • Hacking retailer’s online system. Hackers can gain illegal access to companies you’ve shopped at in the past and steal your information. They can also steal this information if you shop online at sites that don’t have a secure connection.
  • Stealing your physical card. A stranger, family member, disgruntled employee or anyone else could steal your physical debit card when you’re not looking and use it for purchases.
  • Phishing. This happens when a fraudster tricks you into thinking you’ve received a legitimate email from someone you trust, so you provide personal information.
  • Intercepting mail. Scammers could steal your debit card out of your mailbox – before you’ve even had time to realize it’s there – and then use it to make fraudulent purchases.

What should I do if my debit card is lost or stolen?

Report a lost or stolen card immediately to your card provider, so your bank can stop all transactions on your account and issue a replacement card. You can report a lost or stolen debit card by contacting your bank’s customer service number. Some online banks allow you to easily report a stolen card directly through their banking app. Once you’ve reported your lost or stolen card, your card provider could respond by:

  • Deactivating your debit card. In order to make sure that no additional fraudulent charges can be made with your debit card, your card provider might temporarily freeze or deactivate your card. If your card is deactivated, you’ll be sent a new one in the mail and you’ll have to set a new PIN.
  • Freezing your account. If the unauthorized transaction came directly from your account as a money transfer, the bank will likely freeze your account to make sure no one can withdrawal anymore money illegally. Depending on how the investigation goes, you may be required to close your current account and open a new.

The 4 steps to get a refund on debit card fraud

If you’re the victim of debit card fraud, you’ll most likely be able to get your stolen money refunded. Follow these 4 steps to get a refund on an unauthorized debit card transaction:

Step 1: Gather any documentation

You should first gather together any documents proving that you’re the victim of debit card fraud, which you can then pass on to the merchant and bank when you make your claim. Acceptable proof documentation can include copies of receipts, account statements and your own notes on how and when you noticed the unauthorized transaction. If you’ve previously spoken to the merchant, get copies of any documentation between you and the merchant, including emails and chat history.

Step 2: Contact the merchant or website

It’s important to first contact the merchant where the fraudulent transaction took place so it can verify the transaction details. Especially if the unauthorized transaction was done online, it might be as easy as a technological error causing an accidental overcharge, which can be easily refund. If the merchant cooperates with you, it could mean less hassle later, especially if you tell them that you’re putting in a claim with your card provider.

Step 3: Contact your card provider

Your provider will likely have a claims process in place, so follow any instructions set out by your provider. In most cases, you can start by calling your bank’s customer service number or going talk to someone at a branch. It’s best to do start the claims process as soon as you’ve realized you can’t get your money back any other way. You usually have within 30 days from when you received your account statement to claim fraud.

Step 4: Keep an eye on your accounts

As your card provider or merchant is investigating your claim, you should continue to monitor your account. Hopefully, the protection measures your bank put in place, like deactivating your debit car, will prevent any further unauthorized transactions, but it’s still important to be careful. Check all of your bank accounts, credit cards statements and credit report over the next several months for suspicious activity.

In most cases, getting a new debit card will be enough to stop any future fraudulent charges. However, if you continue to see multiple unauthorized charges, and depending on the results of your bank’s claims investigation, you may need to file a police report.

How to avoid debit card fraud

The best way to deal with debit card fraud is to prevent it from happening in the first place. Follow these steps to keep your debit card and financial information safe:

  • Store your debit card in a secure location. Don’t leave your debit card lying around or keep it in an open pocket.
  • Don’t write down your PIN. Memorize your PIN so you don’t have any written copies of your PIN number.
  • Use a PIN number that’s difficult to guess. Avoid using your birthday or phone number.
  • Don’t give out your debit card or PIN number. Even if you trust the person you want to give your card to, they may not be as careful with it as you would be.
  • Try to hide your PIN with your body or other hand when entering it at the debit terminal.
  • Keep a close eye on your debit card anytime you’re using it. Some people may try to distract you in order to steal your card.
  • Monitor your account statements often to check for any suspicious activity.
  • Set up account alerts to get notified each time you make a transaction over a certain limit.
  • Make sure your network is secure when shopping online, by checking for the green padlock symbol next to the URL. This ensures you’re using a secure site, which encrypts your data and lowers your chances of having your information stolen.
  • Shred paper statements. If you still get paper statements, make sure you dispose of them properly by shredding them. That way no one can dig through your trash and steal your financial information.
  • Disable overdraft protection. When overdraft protection is enabled, your bank may transfer money from your savings account once your checking balance hits $0. This means that a fraudster could drain both of your accounts if they continuously overdraw on your account without you knowing.

Are credit cards safer than debit cards?

With the rise of identity theft and fraudulent transactions, more people are shying away from debit cards and relying on credit cards because they’re worried about security. But most debit cards come with a zero liability guarantee which protects consumers against any fraudulent transactions, and microchip technology – so security shouldn’t be your main worry.

Many people opt to use a credit card over a debit card because when someone illegally uses your credit card, they’re stealing money from a financial institution — not from you. As a result, the financial institution works really hard to get its money back. But when your debit card is used illegally, money is stolen directly from your account. It usually takes longer to dispute the charges, and your dollars are on the line if you can’t get your money back.
Compare credit cards vs debit cards

What is a zero liability guarantee on debit card transactions?

If you report unauthorized or fraudulent transactions, your bank will stop the transaction and you will be reimbursed for the amount that was debited (as long as you took reasonable measures to protect your PIN).

Abstract graphic of businessman holding a security check mark icon

According to the Financial Consumer Agency of Canada, you should get your money back if you’re the victim of debit card fraud. But you need to act quickly, because you may have a limited amount of time to report fraud – usually 30 days from when you received your account statement. If you don’t report the problem in time, you could be stuck with the charges.

Debit card providers also monitor all of your debit card transactions to establish your spending pattern, allowing them to identify transactions that seem out of place and even prevent unauthorized transactions.

You can access the zero liability policies of popular card providers using the links below:

What situations are not covered by the zero liability guarantee?

Unfortunately there are still some situations where you might not get a refund for an unauthorized transaction. According to the Financial Consumer Agency of Canada you are not responsible for losses resulting from “circumstances beyond your control.” That being said, if debit card fraud occurred as a result of any of the following factors, you could be held liable – and not get reimbursed – for the unauthorized transaction. These factors include:

  • Your PIN number being the same as your birthday or phone number
  • Telling your PIN to someone else (including family members)
  • Having a written copy of your PIN near where you store your card
  • Not taking the appropriate steps to protect your PIN number

Fraudulent transaction or a dispute with the seller?

Worried and frustrated couple reviewing their billsA fraudulent transaction involves the use of your debit card for charges that you did not authorize. Alternatively, a dispute with a seller or merchant usually refers to a disagreement between the buyer and seller and doesn’t typically need to involve the card provider.

Examples of disputes could include whether the correct item was sold, whether it was sold for the right price or whether it was delivered as promised. The merchant will usually help resolve your problem to avoid bad reviews of its products and services.

If there are too many complaints against a particular company, card issuers may flag that company as untrustworthy and potentially refuse to process its transactions all together. But if you do have to complain to your debit card provider, be sure to have a record of all your correspondence with the merchant handy.

What if the product I received is fake?

If you’ve purchased electronics or jewelry online and suspect that some or all of it fake, you may need to provide proof of this. Log on to the product’s official website or contact the manufacturer to find the list of dealers that are authorized to sell the product. If the website or merchant you bought it from is not listed, you can show this to your bank as evidence that the product was fraudulently sold. If the product is damaged, make sure you take a photo.

Bottom line

Many banks offer debit cards backed by zero liability policies that protect you from unauthorized purchases and allow you to get a refund for unauthorized transaction on your card. But this isn’t a catch-all solution for fraud, because you may be limited in the amount of time you have to recognize a fraudulent purchase and make a claim.

Not all card issuers offer such a guarantee, and those that do have different policies, so you need to check with your issuer to find out exactly what type of coverage you have.

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