Nancy Trejos, a personal finance columnist for the Washington Post had her identity stolen and her debit card and bank account compromised. She was lucky. Her bank called her while someone was trying to buy over $800 of merchandise with her debit card number.

The writer found herself in an unusual position. She had given up her credit card in favor of a debit card, hoping to become debt-free by avoiding credit cards. Trejos used her debit card a lot, and each time she used it, she was putting her bank account at risk. Each time we use our credit card, we're putting our accounts at risk as well. It's just the nature of the beast. Use a card, and the number is exposed to someone.

Trejos quickly found out that the thief had more than just her debit card number. She also had lots of personal information and the security code from the back of the debit card. How did that happen?

While she pondered her situation, she set herself up with a "fraud alert" at one of the credit bureaus, filed a complaint with the FTC, and reported the situation to the police. It would now be harder for Trejos to get credit, as each credit issuer would have to verify her identity before approving a new account, but it's a hassle worth dealing with if your identity has been compromised.
Trejos didn't find out how or where her information got in the hands of criminals. But surprisingly, the police have been investigating and may be close to charging someone with a crime in the case. That's unusual because often, the police don't even want to bother with these types of cases. Trejos still doesn't know where she went wrong, but she had her debit card canceled immediately, and a new one was issued.

Debit cards are a great idea when trying to live within your means, but not so great when identity theft is involved. While credit cards generally protect you against all fraudulent purchases, debit cards do not necessarily do the same. And even with the cards that do protect you, your wait to have the money put back into your bank account could be burdensome. If you're committed to using a debit card, do so infrequently, and have it linked to a bank account with only a small amount of money in it, to limit your losses if your number is stolen.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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