Can Debit Cards Protect Consumers against Fraud?

Posted by Sun on January 21, 2009

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When the RevolutionCard was first introduced in September 2007, I took a look at the card’s advertised features, which include PIN based transactions, but didn’t really feel how that measure can prevent fraud. I prefer signing the transaction to using a PIN, even though almost nobody actually checks the signature. Still, I want a *proof* that I did, or somebody else did, sign the transaction.

Which method do you prefer? And which one is better, or neither?

Last month I posted the first part of the interview with Visa, where the difference between a debit card and a credit card is discussed. In this part of the interview, Visa answers questions on security of debit cards and debit card transactions.

Question: How do debit cards and credit cards differ when it comes to protecting the cardholder against fraud?

Visa answer: Despite the popularity of debit cards, consumers are often confused about the security features and consumer protections debit cards offer. Many of the same features and protections provided by credit cards are also offered with debit cards.

It’s important to know that Visa debit cards carry the same protections as Visa credit cards. For example, all Visa cardholders (prepaid, debit or credit) are protected by Visa’s Zero Liability policy. This policy means you pay nothing if unauthorized purchases are made on either a Visa Credit card or Visa Check card when you choose to sign for your transactions. Some financial institutions offer Zero Liability protections for certain PIN debit transactions as well, but the best way to ensure you are protected is to sign for your purchases. Visa’s Zero Liability policy also applies to purchases made on the Internet.

Continually monitor your account, and review your monthly statement carefully to identify any unauthorized transactions. If you notice fraudulent activity on your card, you should contact your financial institution as soon as possible and report it – this may help to reduce your liability.

Full details on Visa’s Zero Liability policy can be found at www.visa.com/security or by contacting your Visa issuer.

Question: A common piece of advice is to write something like “Ask for Photo ID” on the back of your credit or debit cards instead of signing them to prevent mis-use. On the other hand, most cards state that they are “Not Valid Unless Signed.” What’s your take on signing the back of the card? And what’s the point, really, when nobody ever checks to see if the signature matches your driver’s license or other ID? (Though some clerks do ask for ID if you specify that on your card.)

Visa answer: Some people write “See ID” or “Ask for ID” in the signature panel, thinking that this will help prevent fraud or forgery. That is, if their signature is not on the card, a fraudster will not be able to forge it. In reality, criminals don’t take the time to practice signatures. They use cards as quickly as possible after a theft before an account is blocked. They are actually counting on merchants to not to look at the back of the card and compare signatures—they may even have access to counterfeit identification with a signature in their own handwriting. Bottom line: “See ID” or “Ask for ID” is not a valid substitute for a signature. A merchant has the right to ask the cardholder to sign the card before using it and if the cardholder refuses, to not accept the the unsigned card.

Although Visa rules do not prevent merchants from asking for cardholders’ IDs, merchants cannot make presenting an ID a condition of the sale. Therefore, merchants cannot refuse to complete a purchase transaction because you refuse to provide ID. If a merchant does refuse to complete your purchase, please call the number on the back of your Visa card or 1-800-Visa-911 and provide the customer service representative with the name and location of the merchant.