This is a technology centered blog, but every so often I blog about something else. Recently I needed to explain to my grandmother about the folly of using a debit card online. Basically, I crawled the internet for lovely quotes from various entities that could explain why it was a horrible idea to use debit cards online.
“You don’t use a debit card online,” says Susan Tiffany, director of consumer periodicals for the Credit Union National Association. Since the debit card links directly to a checking account, “you have potential vulnerability there,” she says.
Her reasoning: If you have problems with a purchase or the card number gets hijacked, a debit card is “vulnerable because it happens to be linked to an account,” says Linda Foley, founder of the Identity Theft Resource Center. She also includes phone orders in this category.
The Federal Reserve’s Regulation E (commonly dubbed Reg E), covers debit card transfers. It sets a consumer’s liability for fraudulent purchases at $50, provided they notify the bank within two days of discovering that their card or card number has been stolen.
Most banks have additional voluntary policies that set their own customers’ liability with debit cards at $0, says Nessa Feddis, vice president and senior counsel for the American Bankers Association.
But the protections don’t relieve consumers of hassle: The prospect of trying to get money put back into their bank account, and the problems that a lower-than-expected balance can cause in terms of fees and refused checks or payments, make some online shoppers reach first for credit cards.
Quote from Yahoo Finance
Federal law also protects you if you need to dispute charges on a credit card, but not if you use a debit card or other forms of payment. If you paid cash or used a debit card, the retailer already has your money. So you have a lot less leverage, and thereÃ¢â‚¬â„¢s no guarantee youÃ¢â‚¬â„¢ll get that money back. But if you pay for something with your credit card and arenÃ¢â‚¬â„¢t happy with the purchase, your card issuer can legally withhold payment from the retailer until they resolve the dispute, and you wonÃ¢â‚¬â„¢t be charged.
Quote from The New York Times
The safest way to shop on the Internet is with a credit card. In the event something goes wrong, you are protected under the federal Fair Credit Billing Act. You have the right to dispute charges on your credit card, and you can withhold payments during a creditor investigation. When it has been determined that your credit was used without authorization, you are only responsible for the first $50 in charges. You are rarely asked to pay this charge.
We recommend that you obtain one credit card that you use only for online payments to make it easier to detect wrongful credit charges. For more information on credit card consumer protections, see http://www.privacyrights.org/fs/fs32-paperplastic.htm#3
E-commerce shopping by check leaves you vulnerable to bank fraud. And sending a cashier’s check or money order doesn’t give you any protection if you have problems with the purchase.
Make sure your credit card is a true credit card and not a debit card, a check card, or an ATM card. As with checks, a debit card exposes your bank account to thieves. Your checking account could be wiped out in minutes. Further, debit and ATM cards are not protected by federal law to the extent that credit cards are.
Quote from Privacy Rights
You probably donÃ¢â‚¬â„¢t often hear advice to use a credit card instead of a debit card or cash, but if you can do it responsibly, you absolutely should. Credit cards offer protection from identity theft that debit cards donÃ¢â‚¬â„¢t. For example, with a credit card, your liability for fraudulent charges caps at $50 as long as you report the fraud within 30 or 60 days (depending on the company). However, if youÃ¢â‚¬â„¢re using your debit card online and someone gains access to it, they can clean out your checking account before you even learn thereÃ¢â‚¬â„¢s a problem. ItÃ¢â‚¬â„¢s likely youÃ¢â‚¬â„¢ll get part of that money back, but possible that it can take a while, and that you wonÃ¢â‚¬â„¢t get it all. So, use a credit card instead and pay the bill off monthly.
Quote from About.com
These quotes didn’t get through to my grandmother, but perhaps they’ll be better put to use here.