Last week, Citibank confirmed that it experienced a security breach affecting debit cards in Canada, Russia and the UK. The full story and true scope of this scam continues to unfold this week. Bank of America, Wells Fargo and Washington Mutual customers have also been impacted by the security breach. What’s really going on here?
- Several hundred fraudulent withdrawals were made internationally with Citibank debit cards.
- Citibank reported that it was a third-party business that experienced the security breach. This business is widely believed to be OfficeMax, although the company denies any issues.
- Retailers often store customer PIN numbers and debit card information insecurely. In this case, the PIN data was stolen and used to make counterfeit ATM cards.
- In the past it was considered safer to use ATM cards than credit cards for purchases for because of their PIN protection.
- According to USA Today: "A 2005 study by Pulse, a debit card network, showed that a PIN debit
card transaction was about 15 times safer than its signature
counterpart, based on losses per transaction and per sales volume." - However, fraud protections on ATM cards are significantly less comprehensive than on credit cards. Consumers have to report the fraud right away in order to have the funds returned to their account. It is often safer to use credit cards which have "zero liability" policies.
Are you going to pay for your next purchase with "debit or credit?" Does this recent security breach make you worried about using debit cards? What should businesses do to keep consumer information safe? Share your feedback in the comments section below.
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