In response, some financial institutions have put in place extra security measures, such as blocking signature-based debit card transactions in certain states or at certain retailers. Customers can still use their cards, but have to enter their Personal Identification Number.
“We see spikes of fraud on an infrequent basis, but in the Cincinnati-Kentucky area we saw some activity that was abnormal,” said Greg Dugan, executive vice president of operations of WesBanco. “You do have potentially the exposure of the fraud risk that was there. As far as the cost, it’s more of an annoyance to our customers. It’s an inconvenience, but again we have to take those precautions.”
WesBanco, based in West Virginia, has locations in Middletown, Mason and Franklin.
AurGroup Financial Credit Union of Fairfield has seen a tremendous increase, said Tim Boellner, president and chief executive officer. Boellner is also president of Ohio Credit Union League and said he thinks it’s something all credit unions are experiencing.
AurGroup is meeting this week to decide its options, including potentially limiting its customers’ non-PIN transactions.
“Debit’s definitely the hot topic right now,” Boellner said. “I’ve got to think in the past four to six weeks we’ve seen a spike in it.”
National Bank and Trust Co. of Wilmington, with locations in Carlisle, Franklin and Lebanon, said more than 100 customers called during May with reports of fraud.
“That for a bank our size was an unusual amount of fraud transaction calls,” said Howard Witherby, senior vice president of operations of National Bank.
“All the fraudulent transactions that we have seen were done by fraudulent cards,” he added.
The fake and suspicious charges reported by customers reached the tens of thousands of dollars, a significant amount, Witherby said. But it’s not enough to adversely impact the bank, he said. Many banks and credit unions have zero-liability policies for their customers and absorb the full amount of bad charges to their customer accounts.
Fifth Third Bank, one of the largest area banks, said it had not seen a significant increase in debit card fraud recently.
Ohio banks reported almost 19,000 suspected instances of debit card fraud in 2011, up more than seven percent from 17,600 instances reported in 2010, according to the Financial Crimes Enforcement Network, part of the U.S. Treasury Department. Bank compliance officers file suspicious activity reports to the enforcement network. The costs aren’t reported.
More people use debit than credit cards. There are an estimated 547 million debit and prepaid cards issued in the U.S. by Visa and MasterCard, compared to 519.1 million credit cards, according to The Nilson Report, a payment system industry publication.
Debit card fraud is expected to be an issue until the U.S. adopts chip technology, which increases card security, said Ann Davidson, senior consultant of risk management for CUNA Mutual Group of Wisconsin, who works with credit unions to prevent fraud. Chip technology can prevent counterfeit magnetic stripe fraud due to a data breach or skimmers by validating the card without storing the data.
“I would say it’s rising across the industry because we are the last country to move towards chip technology,” Davidson said. “It’s not going to prevent lost and stolen, but over 80 percent of our reports from credit unions is mag stripe fraud.”
Contact this reporter at (513) 705-2551 or clevingston@coxohio.com. Follow this reporter on Twitter @ChelsLevingston
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