Debit Card Fraud Intensifies

LOS ANGELES -- Despite bank promises of "zero liability" for customers victimized by automated teller machine fraud, getting credit for stolen funds isn't always automatic, as Kelly Quick found out, according to the Los Angeles Times.

In January Quick discovered someone had tapped ATMs to siphon $1,420 from his Bank of America checking account. He notified the bank and the missing funds were credited to his account while the bank looked into the matter. About three weeks later, the bank took the money back, saying it had determined the transactions "were authorized."

The withdrawals at branches in Hollywood, Canoga Park and Sherman Oaks were indeed made using Quick's personal identification number, the Associated Press reported. But his ATM card had not been lost or stolen, and he had not disclosed his PIN to anyone. Quick a compliance officer for a Los Angeles investment advisory company, complained and after a month of what both sides describe as intense exchanges, the bank again returned the money to his account, the Los Angeles Times reported.

Quick's experience highlights the growing friction between banks and their customers as crooks use increasingly innovative tactics to rob ATM machines.

Debit cards, widely used to withdraw cash and pay for goods and services, are popular targets for thieves. And as fraud claims rise, some financial institutions are taking a tougher stance on refunds, creating a backlash. Consumer complaints about banks" handling of unauthorized ATM transactions nearly tripled from 1999 through 2002, according to the Office of the Comptroller of the Currency, which regulates national banks.

Under Federal Reserve regulations, consumers are liable for no more than $50 when they report missing debit cards within two business days. If they wait longer than two days, the liability rises to $500. After 60 days, they must bear the entire loss. The same rules apply when a PIN or card number is stolen. In clear-cut cases of fraud, such as a stolen card, customers usually don't have to pay a dime because zero-liability policies have become a marketing tool for banks, according to the report.

Saying that debit-card losses are "growing at an alarming rate," the American Bankers Association made its first detailed survey of the problem last year. It reported that fraud involving PIN-based debit cards cost banks nearly $51 million in 2001, the news report stated.