Card Fraud That Takes Your Cash, Not Credit

For years, banks and law-enforcement agencies have tried to stay one step ahead of thieves bent on stealing your money by stealing your plastic.

Police and banks have found some success through measures such as magnetic strips to authorize credit-card purchases.

Now there's one more worry: debit-card fraud.

The hybrid cards that look like credit cards but pull money straight out of your bank account are becoming increasingly popular. And they're becoming a preferred vehicle for some criminals as credit-card security has become tighter.

"They're becoming the target of the late '90s," says Detective Joe Paulo of the Los Angeles Police Department's bunko-forgery division.

So far, the problem is small compared with traditional plastic. Estimates of losses from debit-card fraud run to to $19 million last year, compared with about $3 billion for credit cards.

Modes of theft

But along with a rise in theft comes a rise of ingenuity. The Secret Service charts a variety of debit-card misdeeds: thefts of cards from the mail at airline ramps and post offices, highly networked gangs across the country, "dumpster diving" for card receipts, and videotaped transactions near automated teller machines (or low-tech "shoulder-surfing") to capture personal identification numbers, or PINs.

Most worrisome can be "off-line" transactions that don't have the added security of a PIN code. Using a discarded receipt, a crook can make over-the-phone purchases.

Sometimes all it takes for a thief to empty your checking account is to get hold of a receipt with your card number on it.

Take, for instance, Karen Everbeck. A graphic designer in Haverill, Mass., she was surprised one day by a bank statement notifying her that her account was overdrawn by several hundred dollars. When she took a closer look, she noticed $500 in charges that weren't hers.

She hadn't lost her card or given out her PIN but realized that someone had used her debit card - probably using the card number from a receipt.

'You already paid'

"I'll never get [a debit card] again," Ms. Everbeck says. "It's not a statement saying what you owe; it's a statement of what you already paid.... It's like you're guilty until proven innocent."

She recovered her lost money after a two-week investigation by her bank.

If you report a lost or stolen card to the bank within two days, your liability is limited to $50 - often you won't be charged at all. But wait up to 60 days and your liability goes up to $500. Fail to report the fraud within 60 days and the bank isn't liable at all.

Through participating banks, Visa has issued almost 38 million of the cards nationwide, and Mastercard 10 million, according to Debit Card News in Chicago.

Bank officials say that, for customers, convenience outweighs any risks.

Peter Dunn, managing director of the bank-security firm Edgar Dunn & Co. in San Francisco, says debit cards are popular because they offer "widespread acceptance" anywhere in the world.

And for the banks, "it's cheaper," says Mr. Dunn, at 27 cents per transaction versus more than a dollar for a check.

Hang Onto Your Debit Receipts

A FEW suggestions to protect yourself against fraud:

* You wouldn't put a lock on your gym locker and leave the combination taped to the lock.... Would you? So never write your PIN code on the back of your bank card. Memorize it.

* Don't use those trash cans located conveniently near the ATM machine. Hang onto your withdrawal slips as well as store receipts. They often display your account number.

* Report lost or stolen debit cards within two days. That caps your liability at $50, even if someone steals your card and buys a Buick. For up to 60 days, your liability is capped at $500.