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What if a bad guy could walk into a bank and take money out of your account without knowing your name or Social Security number or showing any identification?

It happens every day, in a manner of speaking, with debit card fraud.

Debit card security breaches this month at two of the region’s biggest local banks punctuate the point that debit cards are dangerous, experts say.

“You’re not going to catch me dead using a debit card. The risks are too great,” said Boston identity theft expert and consultant Robert Siciliano, chief executive officer of IDTheftSecurity.com

If the debit card bears a Visa or MasterCard logo, thieves can easily drain checking accounts by simply having the account’s debit card number. They don’t need the person’s name or personal identification number or any other information.

The biggest problems with debit cards, Siciliano said, is that fraud involves money already in your account from paychecks or other deposits, and it may be money you need soon — yet debit card protection isn’t the same as it is for credit cards.

“We’re functioning under a flawed system,” said Siciliano, who is also a security consultant for Intelius Inc., an information commerce firm in Washington state.

In recent cases involving National City and Fifth Third Bank debit cards, the banks blamed third-party processing companies for security breaches.

“When your card number is swiped at a merchant or input into the computer when buying online, the information is transmitted to third parties that process that information,” explained Fifth Third spokeswoman Laura Passerallo. “A criminal may have gained access to the card information through one of the entities involved with processing the transaction.”

Consumers don’t really think about third parties when they’re dealing with their banks, said Jean Ann Fox, director of financial services for the Consumer Federation of America in Washington, D.C. They just expect that their banks will deal with reputable companies that are as trustworthy as the majority of banks are, she said.

Fox agreed that people who use debit cards are setting themselves up for big problems. With credit card fraud or errors, you don’t have to pay any charges under dispute while they’re being investigated. But with debit card fraud or billing errors, you’re fighting to get your own money back — money you might need immediately for rent or groceries.

Plus, Fox said, people with debit card problems have much less time to act and can lose more money.

According to the Federal Trade Commission, with credit cards, you have no liability for unauthorized transactions — unless you’ve lost your card, in which case your maximum liability is $50. You have 60 days from the day the statement is mailed to report any problem and incur no liability.

With debit cards, if a problem isn’t reported within two days of the time you discover it, you could lose up to $500. As with credit cards, after 60 days, the liability is potentially unlimited.

In the recent breach of security cases involving National City/PNC and Fifth Third, neither bank said how widespread the problem was.

Fifth Third said an undisclosed number of customers’ debit card numbers were compromised and the accounts were accessed by thieves. The Cincinnati bank is issuing new debit cards.

National City/PNC discovered fraudulent charges on the accounts of “a small percentage of former National City customers” in Cincinnati, the bank said in a written statement.

National City/PNC spokeswoman Kelly Wagner Amen said the bank has been “working one-on-one with customers to refund accounts and has been returning funds within 24 hours.”

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Article courtesy cleveland.com

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