The recent data breach highlights risks for debit card users

The recent breach in security at the arts-and-crafts retailer Michaels Stores has come as a rude shock for the approximate 185 million US consumers who own debit cards. The thieves did not merely steal the information on the debit cards from these stores in around 20 states, but they also used it to obtain money from the bank accounts of the customers.

However, this is not the first such incident where debit card information has been breached. These sorts of crimes have become very common and have reached dangerous proportions. The theft at Michaels is followed by a similar incident at Aldi Inc. grocery stores last summer, where there were customer complaints about debit-card fraud.

Credit and debit cards make up for about 20% of security breaches and this has gone up from 11% last year during the same period according to reports from Identity Theft Resource Center. The losses from debit-card fraud that were incurred by the banks had risen to a record $788 million in 2008, as per the most recent estimates by the American Bankers Association. Jay Foley, Executive Director at the ITRC was quoted as saying that there would be more such instances in the future as things could get worse as more and more fraudsters are still out there looking for card information.

These debit card thefts, be it the card itself or the numbers on it could be more damaging than a theft on the credit card. The debit card holders aren’t held responsible for any withdrawals if they report their missing card before it is used. However, if they fail to notice until after the fraud is committed, then they could be held responsible on some counts or on all counts.

Bank accounts could be wiped out entirely in some of the worst-case scenarios and it the customer’s checking account is linked to a credit line for overdraft protection, then that would also be lost.

Lauren Saunders, Managing Attorney at Washington D.C. office for National Consumer Law Center states that everything depends on the time that is lapsed. If there are unauthorized charges on a consumer’s debit card and if it has not been stolen or lost, then they could get protection if the charges are reported within 60 days from the time when the statement had been sent. But consumers have just two days to report loss of card, if it goes missing or if it is lost.