One early morning last week, I tried to use my debit card to buy some bread, an apple pie and some danishes at the bakery. The message on the card reader said there were insufficient funds for the purchase of $24. I know, pretty well within a few dollars, how much is in my chequing account at any given time. There was definitely enough to cover my baked goods.
The cashier gave me a sympathetic smile and the woman behind me in line kindly offered to pay. While the gestures of goodwill were appreciated, it was nonetheless an embarrassing situation.
A quick call to my bank's customer service department revealed that my card had been "compromised".
My card gets compromised and needs to be replaced at least once a year. It's not as though I'm careless with it. Just as we're told to do, I always protect my PIN, shielding the terminal with my hand when I key in the numbers. I look around to make sure no one is peeking over my shoulder. And I try to only use the card at stores I'm familiar with and feel I can trust.
The inconvenience of having to go to a bank branch during work hours and stand in line for a replacement card was compounded on this occasion when the clerk left my daily withdrawal limit at $0, requiring a second visit. I'm lucky that it was just an inconvenience. No money had yet been stolen from my account.
Last year, $104.5-million was reimbursed to victims of debit card fraud in Canada, according to Interac Association. While that was down marginally from the prior year, debit card fraud continues to rank as one of the largest categories of complaints received by the Ombudsman for Banking Services and Investments (OBSI).
Canadians are among the world's top users of debit cards and I'm addicted to mine. Over four billion transactions were completed in Canada last year and I contributed my fair share.
But my experience left me feeling victimized and full of questions. What exactly had happened to my debit card and how I can avoid it in the future?
According to my bank's customer service representative, I had used my card at a merchant whose machine was later found to have been tampered with. As soon as the bank was made aware of the security breach, it deactivated all customer cards that had been used at the store.
Caroline Hubberstey, Director Public and Government Affairs for Interact, confirmed that I had done all the right things. I protected my PIN at the card reader and at bank machines and I didn't share my code or write it down anywhere.
Still, we will always have to contend with criminals who make a career of stealing debit card information. To make their jobs harder, Interac is now rolling out a next generation of debit cards that contain an embedded microchip.
If you've received a new credit card lately, you've already seen the microchip technology. The chip acts as a mini computer, storing and processing information. The data on the chip is extremely difficult to copy or change, minimizing the chance of fraud.
According to Hubberstey, a debit card transaction conducted with the microchip technology is significantly more secure than a transaction completed with a swipe of the magnetic stripe.
The replacement debit card I received from my bank has the microchip, but it also still has the magnetic stripe as it will take several years to adapt all of the equipment for the new technology. Bank machines are expected to be converted by the end of 2012 while merchant terminals will be switched over in 2015. Even with an upgraded card, I will be using the magnetic stripe for some time to come.
Still, I'm already looking forward to the day I can use my debit card and not have to worry about getting cut off at the bakery.