PIN Problems: Fighting identity theft - WAFF-TV: News, Weather and Sports for Huntsville, AL

PIN Problems: Fighting identity theft


"Will that be debit or credit?"

It's a question that shoppers face on a regular basis, but what they choose could offer more protections against identity theft than the other.

Federal laws safeguard consumers from monetary loss in the event of identity theft and fraudulent purchases, but they vary from card type and more crucially, depend on how quickly theft victims report their loss.

Small business owner Bart Justice experienced identity theft more than a decade ago and remembers it vividly to this day.

"I had this knot in the pit of my stomach. I was like, ‘Oh my goodness, what is happening to me?'" Justice said.

In 2001, Justice traveled to Romania on a mission trip but came back home to Alabama to find out someone hacked into his bank account.

"I went to an Internet coffee house and was looking at my accounts doing various things, not realizing that there were things like key loggers and spyware recording my passwords," Justice said.

He later learned someone spent roughly $5,000 on his credit card and business bank account.

The ordeal inspired him to start a document shredding business in Huntsville.

Justice now operates Secure Destruction Service on Triana Boulevard.

Justice said customers flock to his business where a shredding truck destroys financial and personal information that is sensitive to identity theft – from tax documents to old computer hard drives.

"There's a lot of ways that crooks can get at your information now so it's a much more prevalent problem," Justice said.

It is particularly so with fraudulent debit card purchases.

"They can watch you type in a PIN at a convenience store. A lot of people have smart phones and they could take a picture or video of you typing in your information while standing in line behind you," Justice said.

"Skimming" devices secretly installed in ATMs can also steal PINs. Thieves have even hacked into computer systems where unencrypted PIN and card information may still be stored.

"You can't guarantee that you won't be a victim of identity theft," said Michele Mason, president of the Better Business Bureau of North Alabama.

"We would encourage people to use their credit card, and immediately pay it off. There's nothing that says you can't pay it off right away," Mason said.

Card holders are advised to read the fine print when it comes to fraudulent purchase liability. Major card companies like Visa and Mastercard have polices that do not offer zero liability for unauthorized debit transactions used with a PIN.

Visa, however, does offer zero dollar liability if the transaction was processed through credit.

Discover was among the few card companies that do offer zero liability for fraudulent debit purchases -- even it was used with a PIN.

How quickly unauthorized debit purchases are reported could determine the loss. The Electronic Fund Transfer Act lays down specific requirements:

  • If the card or account owner reports the loss of a debit card within two days of discovering the fraudulent transaction, he or she is liable for $50 maximum.
  • If unauthorized purchases are reported within 60 days, the maximum loss is $500.
  • If they are not reported beyond that, the victim is liable for the entire loss.

That's why the BBB recommends all card holders check their bank statements regularly.

Justice said he heard it best from the horse's mouth.

Two years ago at an information destruction conference, Justice met Frank Abagnale Jr., the con man-turned FBI consultant whose story was depicted in the film, "Catch Me if You Can."

"His number one advice to people is stop using your debit card. In fact, don't even have one. When you're using a debit card, you're using your money. When a crook is using your debit card, he's using your money," Justice said.

Shortly after this story aired we heard from a local credit union that took exception to the recommendation of not using a debit card. Their position on this issue, and other valuable financial information can be found here:

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