Debit card fraud: What it is and how to get a refund on a fraudulent transaction

The important steps to take if you've been a victim of debit card fraud.

There are many types of debit card fraud, and you may not know you’re a victim until you see your bank statement. Use this guide to find out what debit card fraud is, how to get a refund and how to protect yourself in the future.

What is debit card fraud?

Debit card fraud is when someone else obtains your card details and makes transactions on your card without you knowing. If you report a fraudulent transaction, your bank should deactivate your card to prevent the person from making any more transactions.

You should always check your debit card statement to make sure all the transactions listed are legitimate. This will help you identify any unusual activity.

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 a cash machine, petrol 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 realise it’s there – and use it to make fraudulent purchases.

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

Banks are liable to refund any money for fraudulent debit transactions – unless they can prove you acted fraudulently or been negligent. This could include if you’ve been careless with any online passwords, or if you’ve willingly shared your card details with someone else.

If you haven’t been negligent or acted fraudulently, and you didn’t authorise a payment, you can claim a refund and you should get one.

Note also that the bank’s liability decreases over time – and it can refuse to pay any refund after 13 months – so it’s really important to report the fraud as soon as possible.

How to protect yourself from debit card fraud

Here are steps you can take to prevent yourself from falling victim to debit card fraud:

  • Check your bank statement. Review bank transactions at least once a week to look for any unusual activity.
  • Set up account alerts. Get notified each time you make a transaction over a certain limit, so you can catch illegal activity right when it happens.
  • Check for card skimmers. When you’re out and about, check any card readers you’re about to use. If there are any loose parts or hidden cameras, don’t use it.
  • Make sure your network is secure. When shopping online, look 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 rubbish and retrieve sensitive information.

How do banks investigate debit card disputes?

In most cases, the bank must refund the payment without unnecessary delay. This includes any charges and interest you’ve paid because of the fraudulent transaction. Your bank may ask you to fill in a disclaimer form to state what has happened.

Your bank will then analyse what’s happened and find out where the fraudulent purchase was made. So, for example, if it finds out the card payment was made from an IP address in Manchester, but you can prove you were somewhere else at the time, this is significant evidence that the payment was fraudulent.

Another precaution debit card providers have is to monitor your card use so they can identify any transactions that seem unusual to your regular pattern. Usually, the card issuer will get in touch with you to confirm or deny the transaction in question. Card issuers want to keep your business and they’re doing everything in their power to limit the likelihood of problems arising.

Fraudulent transactions or merchant dispute?

It’s also important to differentiate between fraudulent transactions and merchant disputes. A fraudulent transaction is the result of identity theft and involves the use of your debit card for charges that you did not authorise.

On the other hand, a dispute with a merchant usually refers to the buyer and seller not agreeing on things like the wrong item being sent. Most merchant disputes are resolved amicably since the merchant doesn’t want to run the risk of the card issuer refusing to work with the company. If this does happen, the merchant will have a hard time selling anything online.

If you do have to complain to your debit card provider, be sure you have a record of all your correspondence with the merchant so you can prove you attempted an amicable agreement.

What to do if you don’t agree with your bank’s debit card fraud resolution

In most cases, you won’t be liable for funds lost due to hacking and fraud.

However, if you believe your bank wrongly denied your claim, you should file a complaint with the Financial Ombudsman Service. It will then investigate the issue with your bank and have a decision for you within 15 days.

The bottom line

If you’ve been a victim of debit card fraud, there are several steps you can take to resolve unauthorised transactions and keep your account secure in the future. If you’re in the market for a new debit card, remember to compare your options until you find a card that suits your needs.

Frequently asked questions

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