When you swipe your debit card to pay for something, the point-of-sale (POS) terminal will usually ask you: “Debit or Credit?” The more appropriate question, and one which would be immediately understood by everyone, would be: “PIN or Signature?”. Your response will determine the way your debit card is authorized and one option is more likely to open you up to potential fraud.
So what’s the difference between a PIN debit and a Signature debit and why does one protect you against fraud more than the other?
PIN transactions are routed through what are known as electronic funds transfer (EFT) networks. EFT processing takes place when the customer chooses “debit” when prompted and then enters her PIN. The EFT network then authorizes the transaction and immediately deducts the transaction amount from the customer’s checking account, which is linked to the debit card used for payment. You should count on PIN Debit transactions to post to your account almost instantaneously.
Signature-based debit transactions are authorized, cleared and settled through the Visa or MasterCard networks, the same ones used to process credit card transactions. The signature debit processing is initiated when the customer selects “credit” when prompted by the POS terminal. They will sign a sales receipt and the funds are deducted from their checking account, typically within a day of the processing date.
Now think about the many stories you’ve heard about data breaches and consumer fraud, then consider that gas stations are on the front line of this trend. The gas pump is one of the easiest places for fraudulent activity to occur against anyone using a card.
Debit and credit cards both have consumer protections that leave you free of liability for most transactions. However, you get a little less protection with a debit card if you don’t notice the fraudulent charges within two days.
A credit card offers additional protection at the pump because the funds are not immediately withdrawn from your account. Using a debit card for gas is risky, as credit thieves favor gas stations and might be able to access your account with your personal identification number (PIN) by using a device called a skimmer.
Thieves sometimes attach payment skimmers on gas pumps to steal payment card information from customers when they purchase fuel.
To help be Protected at the Pump:
- Be aware of your surroundings. Try to avoid using pumps that are out of the clerk’s line of sight. Use a credit card, not a debit card if you don’t pay with cash. Try to pay inside whenever possible.
- Check the pump for signs of tampering. Is the cabinet door loose? Is the card slot loose?
- If you see something out of the ordinary, tell the clerk as soon as possible.
HCFCU works hard to keep members safe and offers several services to help assist the fight against fraud. Make sure to monitor your bank accounts closely for charges you don’t recognize by using online banking and the HCFCU mobile app. If you feel that you have been a victim of fraudulent activity on your account, please contact HCFCU immediately. Learn more helpful tips against fraud by visiting our fraud center.
Online information source ftc.gov