Types Of Debit Card Fraud

As we enter the era of digital money and a cashless society, debit card usage has become a part of every transaction. However, along with the convenience, there are many kinds of fraud associated with debit cards.

Similarly, unauthorized access to cardholder information can result not only in a loss of money but also in identity theft. In this context, we take a closer look at the different kinds of debit card fraud and explain how they pose a threat to financial safety.

1. Card Skimming

Card skimming is one of the most common types of debit card fraud. In this scam, different fake devices are installed in the ATM or surrounding area to capture the cardholder's sensitive information, such as PIN, card number, CVV, etc. This type of information helps scammers clone cards and steal PINs in order to conduct malicious transactions in the customer’s account.

Scamming devices are thin clones of ATM keypads or card inserters placed over the genuine keypad or card inserter. When a card is inserted, they record the PIN or read the card data. Sometimes, hidden cameras are positioned above the PIN pad to capture the PIN of the ATM card. These devices are so realistic that it is difficult to differentiate or believe that another pin pad is attached to the genuine one.

Types of debit card fraud: ATM Skimming

2. Phishing And Spoofing

Phishing and spoofing are tactics commonly used in technology to trick people into disclosing their debit card information. 


Phishing is a type of cyberattack where attackers use fraudulent communication in the form of emails, messages, or websites to trick people into capturing their sensitive information. This involves sending people deceptive e-mails, text messages, or websites that mimic legitimate financial institutions, promoting individuals to provide sensitive information such as their card numbers, PINs, and passwords. 


It involves the creation of a manipulated identity to deceive recipients and win their trust. In this method, IP spoofing and email spoofing are common. IP spoofing is faking the source IP address in a network pocket to make it look as if the pocket comes from a genuine and trusted source. 

On the other hand, email spoofing is forging the sender’s address in an email to make it look as if it’s from a legitimate source. 

Phishing and spoofing

3. Mishing

This method combines marketing and phishing to scam people via chat, text, or voice messages. Mishers establish contact with cardholders by sending messages to their phone number. These messages are sent to create a situation of urgency, panic, or pressure on the receiver to provide sensitive information. Also referred to as "SMiShing". 

The misher will most likely pretend to be someone working for your bank, asking for your details and saying that there is some problem with your bank account.

4. Vishing

Vishing is a type of social engineering attack that combines voice and phishing. In vishing, scammers use phone calls or voice messages to trick cardholders into obtaining credit card information. This data is obtained for use in fraudulent operations.

During vishing, attackers present themselves as legitimate entities, commonly banks or government officials. The trick is to create a scenario of urgency to extract the desired information. Vishing can take various forms, including prerecorded voice messages, live calls, etc. In this practice, scammers usually use ID spoofing to make the call appear as if it is coming from a trusted source. In phishing, generally, Voice over Internet Protocol (VoIP) technology is used.


5. Card-Not-Present Fraud

Fortunately, with the rise of EMV chips, debit card fraud resulting from card theft has decreased. However, fraud involving unavailable cards has increased. Non-card fraud is when a scammer takes your debit or credit card information and makes a purchase online or through a catalog in the absence of your original physical card. They do so as a result of card skimming.

6. Identity Theft

Identity theft is when someone steals your personal information without letting you know and uses it for their benefit while pretending it’s you who is doing activities. This involves your information, such as:

  • Name and address
  • Social Security Number
  • Diver’s license Number
  • Bank account numbers and credit card information

This information can be used to open a bank account, make online purchases, obtain loans, file taxes, or commit serious crimes. Most victims of this type of fraud are elderly people who are sick or unable to comprehend daily activities.

Identity theft

How Are Merchants Affected By Debit Card Fraud?

Debit card fraud has a direct impact on individual cardholders and an indirect impact on merchants. But when fraud continues, traders are left with both financial and operational losses, along with tarnished reputations. Therefore, debit card fraud affects merchants in various ways. 

1. Financial Losses

Chargebacks and refund costs are part of financial losses. Merchants are issued chargebacks when customers contest illegal transactions or unordered products. In response, banks have the authority to impose fees on merchants to pay back the affected customers for debit card fraud. Consequently, merchants suffer from refunds and surplus charges. In short, merchants have to compensate the clients. This means sometimes the merchant may have to pay the full amount in addition to the loss of earnings from the previous sale.

2. Higher Operating Costs

When an illegal transaction takes place, merchants may need to conduct investigations to collect evidence. This evidence is later utilized to provide the banks with the required documents to defend the case. This process can be time consuming and hectic. In short, this leads to operational disruption for businesses, which impacts productivity and efficiency.

3. Damage To Reputation

Debit card fraud can tarnish the reputation of the business, leading to a long-term impact as merchants may lose a number of customers and revenue. As a result, if the customer feels insecure, they will avoid the business.

How Can You Protect Your Business Against Debit Card Fraud?

Businesses must take strong measures to save themselves from such types of illegal transactions. The steps should include implementing encryption, having strong password requirements, and keeping an eye on the unusual activities in the customer’s account. Additionally, merchants should educate their employees about the risks of payment fraud and take the necessary steps to strengthen their security.

Take Away

For both merchants and consumers, it is crucial to protect yourself from debit card scams like skimming, phishing, spoofing, vishing, mishing, card not present, and identity theft. Merchants, in particular, must be very careful in order to keep their business going, as debit card scams are detrimental to their financial stability as well as to their market reputation.


How was my debit card used without a physical possession?

Through skimming, it is easy to drain your confidential card and PIN information and use it for scams. Skimming is a way to temper ATM PIN pads or card readers, where they install original-like fake devices that read and store the information you use while cashing withdrawals. This information is then used for debit card fraud.

What are the red flags for debit card fraud?

There are many red flags that you should keep an eye on. Such as:

  • There is a large volume of unexpected transactions in the record. 
  • Multiple transactions are made with different names but the same card details.
  • Inconsistency in the details provided.
  • Unusual time and location of the transaction
  • Multiple failed card attempts were made to make the transaction successful.
  • Transactions from high-risk countries. 
What is the difference between a dispute and fraud on a debit card?

Fraud is an unauthorized or deceptive transaction performed by someone other than the cardholder without the cardholder’s knowledge. On the other hand, the dispute is the complaint from the cardholder, who, after realizing deception or an unwanted transaction, files a complaint for chargeback (claim monkey back) in their bank (debit card issuer).

William Bennett Author Of Poslinksolution

William Harrison

William is a consultant providing expertise in business management. He has successfully integrated POS systems into various businesses, demonstrating a passion for improving processes and offering financial advice. With a decade of experience in dealing with POS systems, payment gateways, and ATMs, he is also a passionate writer about finance and accounting.