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WASHINGTON Although banks are eager to cash-in on the unsecure debit card craze, which lets them pocket a big transaction fee on each purchase, these cards put consumers in danger of being hit by a new wave of credit card fraud that can clean out bank accounts in a matter of hours.
This alert was issued by Michelle Meier, counsel for government affairs at Consumers Union. She urged Congress to step in with new consumer protections at a Capitol Hill hearing Tuesday where new trends in marketing un-secure debit cards were put under the microscope.
"Congress has a key role to play in ensuring that consumer savings are secure by creating liability rules and legal protections that would apply to any new payment technology," said Meier. "The convenience of a plastic check is undeniable, but there's no reason to sacrifice security to get convenience."
Meier told lawmakers, without a PIN number to ward off fraud, thieves who come into possession of your check card can use it to wipe out your entire bank account while current law provides no guarantees about recovering loses.
Consumers Union is endorsing legislation authored by Reps. Charles Schumer, D-N.Y., and Tom Barrett, D-Wisc., to lock in the voluntary liability limit of $50 set by major banks associated with the VISA "check card" and the Mastercard "Master Money". Consumers Union has also endorsed a ban on the proliferating and dangerous practice by some banks of mailing out unsolicited check cards. Finally, the organization believes banks should have a legal obligation to restore any money taken through debit card theft expeditiously.
There are currently some 60 million such unsecure debit cards on the market, and by the turn of the century projections are they will comprise nearly half of all debit cards.
Current federal rules give banks nearly three weeks to re-credit stolen funds and allow wide latitude to the banks to refuse to fully re-credit your account. Unless a bank is notified within two days of check card fraud, customers are exposed to $500 in liability ten times the amount they would normally incur. If unauthorized debits occur on a bank statement, the customer has 60 days to notify the bank, or the entire amount could be lost for good.
Consumers Union also praised First Virginia Bank, Inc. which has pledged not to get on the unsecure debit card bandwagon, citing the danger to consumers, and urged other banks to follow their lead.
