Once again, we are pleased to join CSPI's Annual Hubbard AWARDS ceremony, where prizes are given for misleading snake oil advertising. This year, we are honored to present an award to VISA USA, for its campaign featuring Daffy Duck and Bugs Bunny, as well as some famous politicians, promoting its VISA Check Card. The VISA Check Card, also known as an ATM debit card, draws money out of your checking account. Unlike a plain old ATM card that requires a secret PIN code for every transaction, whether at a merchant or an ATM machine, the new VISA Check Cards, and Mastercard's MASTERMONEY cards, allow access to your checking account with just a signature.
Daffy and Bugs tell you these cards are better than a check, because you can use them without the "inconvenience" of providing identification. What Daffy and Bugs aren't telling you, is this: not only can you use your VISA check card without ID, but a thief may also use your card without identification, without a personal identification number and even without the card to drain your checking account, even if you don't lose your card or disclose your secret code. I know, not only because I work for a consumer group, but because I have been a victim of debit card fraud. After I used my card in a retail transaction, a thief took my receipt and used the number and expiration date to order merchandise over the telephone, and later to book a hotel room in Boston.
Over the last year, banks have replaced millions of expired PIN-only ATM cards with unsolicited VISA Check and Mastercard MASTERMONEY cards. Neither VISA nor Mastercard have required banks to ask consumers whether they want the new unsecure cards. Worse, they haven't told consumers that although the cards look just like credit cards, there's a big difference in your liability if someone steals your debit card.
Credit card liability is capped by the Truth In Lending Act at $50. Regardless of the cap, you're in a dispute with the bank only about whether you owe the money. On the other hand, ATM debit card liability can go as high as $500, or even all the money in your checking account, under certain circumstances. Worse, you're not fighting about whether you owe the money, you're fighting to get your own money back. At least one victim of debit card fraud lost all of the money in his checking account, as well as several thousand dollars of a cash overdraft account.
In August, following intense pressure from PIRG and other consumer groups, VISA and Mastercard agreed to require their member banks to limit consumer liability voluntarily to $0-50 in many circumstances. That's a good first step, but it should be the law. Consumers should not risk losing all the money in their checking accounts, simply because their bank replaced their safe, secret code based ATM card with an unsecure card that allows a thief to drain their checking account, armed with nothing more than a restaurant receipt.
When the credit bureau TRW voluntarily offered free credit reports in 1993, they were praised, but then in 1997, despite continued credit report errors, they took away the free credit reports. That's why debit card liability must be limited by law. Other changes PIRG endorses are the following: Reinvestigation timetables under the law must be toughened, banks should be required to issue provisional refunds quickly and banks should be required to make consumers whole after fraud occurs by restoring credit reports, sending apology letters to creditors, etc.
Banks should be required to give consumers a clear choice between PIN only and signature-based (off line) cards and consumers should be allowed to return unsolicited off line cards to receive PIN only cards without hassle. Legislation introduced by Rep. Chuck Schumer (D-NY), Sen. Al D'Amato (R-NY), and others would accomplish these reasonable goals.
Our money should be safer in the bank than under our mattresses. That's why these protections should be the law. Daffy Duck may be "the greatest", but unsecure debit cards are not. That's why U.S. PIRG is pleased to join CSPI to present this Hubbard Award to VISA USA.
EDITORS: Consumers can receive a debit card fact sheet. (1) Automatically by sending e-mail with the subject "debit" to USPIRG or (2) Downloading it from our web site or (3) by sending a SASE to PIRG DEBIT CARD, 218 D St SE, Washington, DC 20003.
[ Hubbard Press Release ]