Entries in Debit Cards (27)


Debit Card Thieves Ship Shopping Spree to Victims

iStockPhoto/Thinkstock(ANCHORAGE, Alaska) -- When Chris and Susie Linford of Anchorage, Alaska, found out that their bank account was drained of nearly $5,000 without their knowledge, they were stunned.

“We had our debit card on us the whole time,” said Mrs. Linford, who believes the thief may have stolen their information remotely. Fortunately for the couple, their credit union, Credit Union One, quickly detected the fraudulent purchases and refunded their money. But the surprises didn’t end there.

In the weeks after the theft, the Linfords began receiving an odd assortment of Christmas gifts at their front door -- a veritable hodge-podge version of the 12 days of Christmas that directly corresponded with the thieves’ $5,000 shopping spree. Among other things the Linfords received:

  • A $900 signed Dale Earnhardt Jr. poster
  • A Chipper Jones autographed baseball bat
  • Six metal plant stands
  • A case of leather Samsung Galaxy Note covers
  • Four Northface jackets
  • A series of linen photo albums
  • Two women’s coats
  • One radar gun
  • And a letter from the fruit of the month club regretting to inform them that they do not deliver to Alaska

Mrs. Linford speculates that the thieves failed to change the shipping address when using the stolen information to order items online, either that or they planned to come by the house and pick up the goods before the Linfords noticed. An idea that Mrs. Linford says, would have been especially foolish: “I work from home and we have a very large dog, bad plan.”

The barrage of gifts slowed down after the Christmas season but has picked up again recently as vendors continue to send items that were on back-order when the crooks purchased them. Including Mrs. Linford’s personal favorite so far: “yesterday our little hacker sent us some virus protection software.”

Because of the nature of the crime, the Linfords were told that they do not have to return the items to the merchants, but that hasn’t stopped Mrs. Linford, who has been contacting each seller individually to return the ill-gotten goods. Otherwise the seller would have to pay out of pocket.

“We were told you’re welcome to keep it, but I thought no that’s not right,” Linford told ABC News.

With both the money and the items returned to their rightful owners, the case seems to have been put right. But as Linford points out there are still a few people out there suffering because of it. “I’m sure the thieves family’s are a little disappointed, they didn’t get their Christmas gifts.”

Copyright 2013 ABC News Radio


Swipe Card Reform: Are Consumers Saving Money?

Comstock/Thinkstock(NEW YORK) -- As the one-year anniversary of credit and debit card swipe fee reform approaches, a debate about whether shoppers are saving at the register as a result rages on.

The National Retail Federation (NRF) estimates that U.S. retailers and customers save $18 million a day thanks to reform that reduced the swipe or interchange fee -- typically a 1.5 percent to 3 percent charge -- paid to banks for credit card transactions.

The Durbin amendment, which lowered the so-called “interchange fees,” went into effect on Oct. 1, 2011, in response to financial reform on Wall Street.

The alleged savings though can be a bit squishy to identify.

“Merchants haven’t necessarily labeled the savings from reform as a ‘debit discount’ but they have nonetheless found a variety of ways to pass the value along to their customers,” NRF President and CEO Matthew Shay said in a statement.  “Depending on the store, shoppers are paying lower prices, getting better service or avoiding prices hikes that otherwise would have come with inflation.”

“Retailers are simply too competitive not to share savings with consumers because customer value is one of the key ways they take market share away from their competitors,” Shay said.

According to Bankrate, swipe fees revenue doubled from $30 billion to $60 billion from 2005 to 2011, while checking fees rose from $11 to $14 on average during the same period.  After labor, according to the Wall Street Journal, interchange fees are the largest expense for retailers.

But, the Electronic Payments Coalition (EPC), a payment industry group for banks, says consumers are being hit in other ways.

“Giant retailers lobbied Congress so they could pay less to accept a debit card, with a wink and a nod that they would lower prices for their customers.  One year later, ask yourself -- do you feel that you’ve seen lower prices?  Have you seen a discount for using your debit card -- which would have been the easiest and most direct way to fulfill their promise to Congress,” Trish Wexler, a spokesperson for EPC wrote ABC News in a statement.

According to a report by financial research firm Javelin Strategy & Research, credit card swipe reform cost banks $6.6 billion a year in lost revenue.

”More likely, you’ve seen your free checking disappear and increased fees as card issuers had to make up for $8 billion in lost revenue that supported these debit card programs.  Let’s just call a spade a spade -- this was a political handout to big-box retailers, who are now scrambling to make excuses for why they couldn’t pass these savings along to customers,” Wexler continued.

Since the fourth quarter of 2009 through June of 2011, the number of big banks offering free checking accounts declined by 54 percent, according to research firm Moebs Services.

Ed Mierzwinski, consumer program director for the advocacy group U.S. PIRG, says small banks and credit unions continue to offer free checking accounts and there’s no proof consumers are not saving money.

“Small banks are benefiting from swipe reform.  The industry has no proof that merchants aren’t passing savings along but the bank industry is trying to gain support for a horrible settlement that will allow them to perpetuate their horrible practice and continue to raise swipe fees,” Mierzwinski told ABC News.

Mierzwinski said many unfair practices by the banks have been changed by good regulation, including swipe fee reform on debit cards, recent Consumer Financial Protection Bureau-imposed penalties on credit card deceptive marketing and the 2009 Credit Card act that curtailed credit card companies late fees and restricts exorbitant interest rate increases.

“The banks and VISA and Mastercard credit card networks are using a cartel to gouge merchants with unfair swipe fees that were non-negotiable and the result is cash customers at the store are paying higher prices because swipe fees were going towards creating rewards for more affluent credit card customers,” says Mierzwinski.

Copyright 2012 ABC News Radio


High Gas Prices: Should You Blame Your Bank?

iStockphoto/Thinkstock(NEW YORK) -- Should you blame your bank for high gas prices? A new report out Tuesday says it’s not just supply and demand and Middle East politics that determine the price of a barrel of crude; Visa and MasterCard and the other card companies share some of the blame for the high price of gasoline, the report said.

The new report by the National Association of Convenience Stores says it’s those so-called swipe fees at gas stations.  That’s the fee that stores have to pay credit card companies every time a card is swiped. (Congress took aim at those fees for debit cards, but not credit cards.)  According to the report, when gasoline is $4 a gallon, about 7 cents of that can be blamed on swipe fees.  At $4.50 a gallon, the fee rises to 7.6 cents. That swipe fee, which is partly a percentage of the sales price, goes up with the price of gas.

In the grand scheme of things, swipe fees don’t represent a huge portion of the price.  By some estimates the recent jump in gasoline prices has added only an additional $30 a year to the average driver’s fuel bill.  But convenience stores, which sell a lot of gasoline, point out that folks will drive a great distance just to save a few cents a gallon. They also say that these hidden fees get passed on to every customer, even those paying cash,  because it’s a cost of doing business.

The credit card industry, as might be expected, begs to differ. In a statement, Ken Clayton, an executive vice president with the American Bankers Association, told ABC News, “Once again, the convenience store lobby wants something for nothing.  They want to continue enjoying the benefits of our nation’s payments system -- from lower costs to fraud prevention -- without paying for it or providing lower prices to their customer base.  This ‘report’ is really about convenience stores seeking government price controls that pad their bottom lines, leaving consumers to pick up the tab while they rack up additional profits.”

Jeff Leonard, the vice president of Industry Advocacy for the National Association of Convenience Stores, argues that the bankers’ group “isn’t taking into account the reality of gasoline retailing.” Lower swipe fees would get passed back to consumers, because the price at the pump is so competitive, he said.

“The goal is to lower the price of gasoline and get them in the store,” he added.

Clayton, of the banker’s association, points out that swipe fees are a small part of the retail price, “Gas prices are driven by Middle East instability, gas refinement costs, and the broader issues of supply and demand. It’s time the retail lobby recognizes that and stops making up arguments driven by their own self interest.”

As for consumers, they’re just glad prices seem to be inching down from the recent record highs.

Copyright 2012 ABC News Radio


Former Army Reservist Says Bank of America Refunding $25K in Fraudulent Debit Charges

Jin Lee/Bloomberg via Getty Images(UTICA, N.Y.) -- Two years later, Bank of America is refunding $25,243.71 to a former army reservist for charges he said were fraudulently accrued to his debit card while he was on leave from service.

John McDevitt, a U.S. Army reservist from Clayville, N.Y., served in Afghanistan for a year and spent his two free weeks in Greece in November 2010 according to a policy afforded to soldiers deployed in a combat zone. That was where he claims he was ripped off at a clip joint for the cash off his debit card.

McDevitt said he is "excited" Bank of America is refunding over $25,000 that the nightclub in Athens wrongly charged him.

McDevitt said he is waiting to receive the refund after a senior executive of veteran affairs from Bank of America called him on Wednesday evening to notify him of the news.

"I'm hoping now the politicians in this country will use this to change these laws to protect consumers," said McDevitt, who has written letters to public officials about strengthening rules regarding fraud protection. "Whether a debit or credit card, if someone forges your name, it's the responsibility of Visa or the bank to hold that payment until it's verified."

T.J. Crawford, spokesman for Bank of America, told ABC News that "from day one our fraud team handled this case by the books, following all internal and external protocols including attempted arbitration with Visa and "it was determined that the dispute is between the merchant and Mr. McDevitt."

"That being said, in light of Mr. McDevitt's service to our country we are extending him the benefit of the doubt and refunding the full amount," Crawford said.

Last week, outraged over the charges he said Bank of America should refund him, McDevitt protested outside a branch in Utica, N.Y., holding a sign that read, "A soldier that puts America first should have a bank that puts the soldier first,"as reported by WKTV.

On Nov. 29, 2010, McDevitt notified Bank of America, which issued a temporary credit to his account for the full amount on Dec. 3, 2010, while the fraud claim was being reported. But the bank took back the funds after determining that "no error had occurred in this instance" as stated in a letter sent Dec. 9. 2010 from the bank.

McDevitt said his only option was to use a debit card because he has been unable to obtain a credit card after his ex-wife filed for bankruptcy.

In a letter provided to ABC News by McDevitt, the bank said that on Dec. 9, 2010, it "received the signed sales drafts from the merchant reflecting your signature and card imprint."

Attempts by ABC News to reach the club for comment were unsuccessful.

"We found that the transaction activity in question was authorized and posted, or billed, correctly to your account," the letter stated.

The bank also stated that it attempted a "chargeback" against the merchant but on Feb. 23, 2011, "the merchant represented the transactions stating that they were valid, based on the sales drafts already provided."

The bank also wrote in that letter, "due to your initial interaction with the merchant, this case is considered a non-fraud claim. Furthermore, you were unable to provide copies of the receipts for the initial transactions that you said you authorized."

McDevitt said the signatures on the receipts are not his and there is no record of the receipt he actually signed.

When asked whether a customer's proof that a signature does not match his is evidence of a lack of authenticity, Crawford said "every instance is unique."

"These are handled on a case-by-case basis," Crawford said.

In a letter dated May 13, 2011 from the bank provided by McDevitt, the bank said "Our attempts to resolve this matter with the merchant have been unsuccessful. We have exhausted all our available options. We can only suggest that you explore other avenues of recourse to obtain a refund and/or come to a more equitable solution with the merchant."

The bank, which followed the rules of fraud protection and also took measures in "good faith," stated that Visa "advised us that they have declined our arbitration case and have decided in favor of the merchant" on May 13, 2011."

Consumers should be aware of differences in fraud protection for credit cards and debit cards, Beverly Harzog, credit card expert with, said. With credit cards, the maximum liability for fraudulent charges is $50. If you report the loss or theft of your card before it's used, you're not liable for anything. In most cases, the $50 is also waived

"The rules for debit cards are different," she said. Harzog said if your debit card is lost or stolen, you have to report this within two business days to limit your liability to $50. If you don't report it within two days, you can be liable for $500. But if you don't report an unauthorized transfer within 60 days of receiving the statement showing the fraudulent transfer of money, your losses can be unlimited.

"If there are unauthorized charges on your debit card statement and you haven't lost the card or it hasn't been stolen, you have to report the fraudulent charges within 60 days of the date on the statement to limit your liability," Harzog said. "You're only liable for charges after that 60-day window if you fail to report it."

Copyright 2012 ABC News Radio


2011 Was Worst Year for Suspected Financial Crimes on Record

iStockphoto/Thinkstock(WASHINGTON) -- A tidal wave of fraud reports fed by an ingenious array of scams borne out of the mortgage crisis have swamped federal offices, which are investigating and prosecuting only a small percentage of the allegations.

In 2011, suspected instances of money laundering, consumer loan fraud, debit card fraud, mortgage loan fraud, casino fraud and other scams hit all-time highs, according to suspicious activity reports known as SARs submitted to the Treasury Department's Financial Crime Enforcement Network (FinCEN).

The SAR numbers have been fluctuating between 1.2 million and 1.3 million totals since 2007, but in 2011 they jumped up to more than 1.5 million.

"The financial meltdown that took place from 2007 to 2009 uncovered all the skeletons, what was taking place in the marketplace, from mortgage financing to Ponzi schemes," said Curt Novy, a mortgage and real estate analyst based in San Diego, Calif.

While providing a fertile ground for criminals, the financial crisis also lured those who might not have ever thought to commit a crime, according to Harry Cendrowski, a fraud and forensics consultant based in Chicago.  He said having a respected person with a financial portfolio suddenly faced with financial ruin creates a "perfect storm."

Between 2007 and 2011 there was a 74 percent increase in fraud cases where people working within a financial institution exploited internal controls for their own gain, according to a study by KPMG.

"I don't hesitate to tie this into the economy," said Tim Gallagher, chief of the financial crimes section of the FBI.  "There has been a lag time from the meltdown to now."

Gallagher attributed the steep increase in money laundering and mortgage loan fraud specifically to hucksters who scammed distressed homeowners.  Mortgage loan fraud has had the most dramatic surge over the past decade, going from 9,539 in 2001 to 93,564 in 2011, according to FinCEN figures.

As the fraud peaked in 2011, however, the FBI scaled back its fraud investigations, with just 2,691 cases -- or three percent -- of the more than 90,000 suspected mortgage loan fraud cases "under investigation," according to the FBI.

"About 70 percent of our cases are more than a million dollars.  We are going after big fish as far as putting cases together, and we're going after people on the inside because of fiduciary responsibility and the element of trust that they're violating and doing the most damage," Gallagher said.

The small number of federal investigations is somewhat bolstered by state and local authorities, who can also investigate and prosecute the crimes.

Copyright 2012 ABC News Radio


Check Fraud Declining, But Debit Card Crimes on the Rise

Hemera/Thinkstock(NEW YORK) -- During a year that saw a record rise in financial crime reports, one scam that has plagued banks and consumers for decades is fading away: check fraud.

Reports of suspected counterfeiting, check fraud and check kiting were among the financial crimes that saw declines during 2011, dropping 7.5 percent from 2010.  The drop in check fraud came as the Financial Crime Enforcement Network (FinCEN) had a record number of suspicious activity reports (SARs) in 2011 throughout the financial industry.

The number of check-related suspected crimes peaked in 2008, with banks sending 152,874 suspicious activity reports to FinCEN.  From there, the cases are investigated by federal, state or local authorities, depending on the amount of money involved in the crime.

Since 2008, the number of check-related crimes has dropped to 107,041.  The drop in check fraud numbers points to a trend many Americans are familiar with -- the slow disappearance of checks.

The use of checks as a form of payment has been declining in recent years.  Personal check use has dropped by 12 percent among consumers between 2008 and 2010, according to the American Bankers Association (ABA).

In dollar amounts, check fraud losses have declined from $1.02 billion in 2008 to $893 million in 2010, according to data from the ABA's 2011 Deposit Account Fraud Survey Report.

Meanwhile, the use of debit cards has increased, and with it, debit card-related crime.

From 2006 to 2009, the use of debit cards as a form of payment rose 14 percent among Americans, while debit card crimes rose 41 percent, according to data from the Federal Reserve and FinCEN.

The number of suspected debit card frauds each year is still significantly lower than suspected check crimes, with total debit card fraud accounting for just 6,258 suspicious activity reports from banks in 2011 -- the highest number of debit crimes ever reported. 

Copyright 2012 ABC News Radio


Thieves Target Gas Pumps to Skim Credit, Debit Cards

iStockphoto/Thinkstock(LOS ANGELES) -- High gas prices have been putting a dent in people’s wallets in recent months, but a small device planted by thieves at gas pumps could be affecting your wallet in a much bigger way.

The thieves are known as “skimmers,” people who steal debit and credit card account information using a high-tech device at gas pumps.

Skimming has been a financial crime across the United States, but has particularly been an ongoing problem in Southern California. Since January of 2011, there have been four cases reported with the Torrance Police Department, according to Sgt. Steven Jenkinson, who works there. Each case can have many victims, with the most recent case affecting around 130 credit card accounts.

“They accessed the panel behind the pump by prying the door open, and they were able to insert an electrical device that captures your account information when you swipe your card,” said  Jenkinson.

A customer was paying for gas by credit card when they realized the card reader was not working. Subsequently, they notified the gas station who decided to call maintenance.

“And then maintenance looked at it. They said, ‘Hey what is this thing? What’s this device in here?’ They knew what it was and that’s when they called us,” said Jenkinson.  Officials arrested three suspects on March 1 for skimming debit and credit card information at the gas pump.

Some gas station owners have taken it upon themselves to prevent the thefts. At Valero gas station in Sierra Madre, Calif., the owner installed four seals on each pump. While the owner declined to comment, Jenkinson explained a broken seal can help the owner identify whether the pump has been tampered with.

“It’s not regulated and it’s not mandatory,” added Jenkinson.

However, he believes it’s important for card users at pumps to be aware of the skimmers.

“People can check their bank statements regularly, if not daily to make sure there are no charges they didn’t make,” he said. Other tips have been to pay inside, use cash and avoid pumps that seem to have been tampered with.

Copyright 2012 ABC News Radio


Bank of America Debit Fee Plan Led to 20% Jump in Closed Accounts

Jin Lee/Bloomberg via Getty Images(CHARLOTTE, N.C.) -- The days of the easy fee grab may be coming to an end. Bank of America’s failed plan to impose a $5 monthly debit card fee led to a 20 percent increase in closed accounts in the last three months of 2011 and a public relations headache, which other companies may be keen to avoid.

Asked about the fee debacle in a conference call with investors last week, Bank of America CEO Brian Moynihan said, “So I’d say that yes, we had some impact from the $5 debit fee. That’s why we made a decision to reverse it.”

The incident may lead to companies thinking again before levying fees on services that have traditionally been free. Verizon Wireless canceled a $2 fee for single bill-pay transactions online or via telephone in December, just one day after the telecommunications company announced the fee.

During an earnings conference call on Thursday, Moynihan revealed the $5 debit card monthly fee, proposed in late September and rescinded just one month later after public outcry from customers, led to an, “elevated level of account closings in the quarter” -- a 20 percent jump in the fourth quarter of 2011 compared with 2010.

Bank of America reported earnings of $2 billion in the last three months of 2011, up from a net loss of $1.2 billion in the same period a year ago, boosted in part from a one-time gain on the sale of China Construction Bank.

Copyright 2012 ABC News Radio


Supermarket Customers Hit By Debit Card-Skimming Thieves

iStockphoto/Thinkstock(MODESTO, Calif.) -- Thieves who inserted data-skimming devices into card readers at Lucky's supermarket self-checkout counters ripped off as many as 500 of the California chain's customers, officials said.

Lucky's, owned by Save Market Supermarkets, said in a statement that the company has removed tampered credit/debit card readers from 24 stores. The readers have been sent to the Secret Service, which is investigating the scam.

Data-skimming devices inserted into the readers allowed the crooks to steal information like the shoppers' PIN numbers, expiration dates and security codes from the cards wirelessly. Lucky realized something was up, according to its statement, when during a regular review it discovered a reader that "looked suspicious."

Lucky said in its statement that its customer-support team has been fielding up to 2,000 calls a day. It said all the readers that were tampered with were replaced by Nov. 23. The company doesn't know how much money was taken illicitly because of the tampering.

To protect themselves against skimmers, shoppers should consider using credit rather than debit cards, says identity theft expert John Sileo, author of "Stolen Lives, Identity Theft Prevention Made Simple."

"It's much more attractive to a thief to get a debit card, and it's much harder on a victim," Sileo says.

The reason: with a debit card, consumers often have only a couple of days to notify the bank that they were victims of fraud, whereas credit-card companies generally allow 60 to 90 days and do the investigation themselves.

Sileo recommends checking out the reader you are about to use and making sure it looks just like the one in the other aisles--with nothing loose, sticking out and with no sign of a camera attached.

He also suggests setting up debit and credit card alerts via text message or email. "If you're home watching the football game and you just spent $5 in Starbucks, you know you've got a problem," he said.

Self-checkout makes fraud easier, he said. "There's nobody watching. It does make it easier to slip on a skimmer or put in a camera that records people's PIN numbers," he said. But he doesn't think shoppers need to stop using self-checkout. They just need to be vigilant.

Copyright 2011 ABC News Radio


Consumers, Small ATM Networks Fight Against ATM Fees

Goodshoot/Thinkstock(WASHINGTON) -- Consumers are fed-up with not just Bank of America's debit card fees but other banks' ATM fees as well: three anti-trust lawsuits are alleging Visa and MasterCard, the largest card networks, are unfairly "fixing" prices against both consumers and independent ATM providers.

In the most recent suit filed on Oct. 18, one man from New Jersey, Justin Genese, is proposing a class action against the top providers of automated teller machine (ATM) services for "orchestrating, implementing, and facilitating a conspiracy to fix the prices for ATM access fees."

An ATM user who obtains money from a machine not belonging to their bank is notified on the ATM's screen about a $2.50 fee or more surcharge.

Genese's suit is against Visa, MasterCard, Bank of America, J.P. Morgan Chase, Wells Fargo and two other financial companies, alleging that customers have "been forced to pay artificially inflated, supra-competitive ATM Access Fees" to the bank defendants and "bank co-conspirators."

All three suits, filed in the District of Columbia, say the largest ATM providers and other financial institutions are unfairly restricting market movement by preventing ATMs from charging different fees to consumers based on their type of debit card.

A similar suit filed by 14 independent ATM providers on Oct. 12 alleges that Visa and Mastercard are restricting competition by forcing them to charge all their users the same fee, regardless of their type of debit card.  The plaintiffs include ATM operators not affiliated with banks, including the National ATM Council, a trade association, and ATMs of the South.

The suit alleges that Visa, MasterCard and their member banks "have misused this power to fix the access fee for any transaction at a given ATM or terminal to be no less than the amount charged at that ATM or terminal for a Visa or MasterCard transaction...without regard to any cost saving to the ATM operator of obtaining service from one of the alternative PIN-based networks."

"The ATM restraints, therefore, effectuate horizontal price fixing that is unlawful per se," the suit alleges.

"If there was a truly competitive market, the levels of the fees would be lower," Jonathan Rubin, attorney for the ATM providers said. "They're in the business of selling convenience."

About half of the 400,000 ATMs in the country are operated by providers not affiliated with banks, according to Rubin.  He said his clients earn revenue by charging a surcharge to customers and a back-end switch fee.

Jim Issokson, MasterCard spokesman, said "the claims challenging certain MasterCard ATM rules are without merit."

"These rules were put in place to protect consumers from ATM operators seeking to impose discriminatory surcharges on our cardholders," he said.  "We believe these important consumer protections must be preserved and we will vigorously defend against the claims brought against us."

Lisa Westermann, a Wells Fargo spokeswoman, said, "We believe the allegations of the complaint are without merit and plan to vigorously defend the case."

Spokesmen for Visa and Bank of America declined to comment.  JP Morgan Chase did not respond to a request for comment.

Copyright 2011 ABC News Radio

ABC News Radio