Using Debit Cards Online

Buying online is rapidly becoming the preferred method of shopping for more and more people. While many consumers are using credit cards to make their purchases, some are using debit cards, which aren’t as safe.

Online Debit Card Use: Is it Safe?

When you shop with a credit card, your purchases are protected under the Fair Credit Billing Act (FCBA), which states that you’re responsible for only $50 in unauthorized charges. Additionally, the FCBA protects credit card users from other billing errors, such as charges for damaged products, returned products or merchandise that was never received.

Debit cards, however, don’t fall under the protection of the Act. Instead, each debit card company chooses whether they provide customers with protection. In many cases, stolen debit card numbers can quickly empty a bank account and you might not have any recourse.

Online Debit Card Protection Limitations

In order to provide card owners with online debit card protection, Visa and MasterCard have developed policies that are similar to those of credit cards, but with limited protection. Visa requires that card companies that use its logo abide by the policies in the FCBA, unless the issuer can prove owner negligence, such as throwing away a debit card without cutting it up.

MasterCard also offers zero liability for unauthorized online purchases, but only if owner negligence isn’t an issue, if the account is in good standing and if the owner hasn’t reported two or more unauthorized purchases in the last year.

Although Visa and MasterCard offer zero liability for unauthorized purchases with debit cards online, this protection is only a company policy, not a law, and is subject to changes and reviews by the card issuer. Coverage also excludes debit card purchases made using a PIN number.

Recommended Method for Buying Online

Privacy Rights Clearinghouse, a nonprofit consumer organization, recommends that consumers use credit cards exclusively for online purchases.

In addition to protection from unauthorized purchases, you have a greater measure of control when you’re buying online with a credit card. You have the right to dispute charges and withhold payments while a creditor investigation is taking place, and you can be held liable only to a maximum of $50.

Also, you can stop payment to a merchant if you’re dissatisfied with the merchandise, or if it arrives damaged. When you make a purchase with a debit card, the money comes out of your bank account almost immediately, so you’ll have a more difficult time trying to recoup the cost of the defective product.

Know What Kind of Online Debit Card You Have

Before you use your debit card online, find out just what kind of card you have, and how you’re protected. Check to see whether you have a debit card, a check card or an ATM card, and look for a Visa or MasterCard logo to verify your liability in the event of unauthorized use.

Using debit cards online could expose your checking account to thieves. Report any suspicious activity to your financial institution as soon as you’re aware of it.