On December 22, a representative for Visa wrote about that company’s protection for customers who use debit cards:

If your account is compromised, Visa is committed to setting things right without further aggravation or inconvenience to you. Visa’s cardholder protection policy requires all financial institutions issuing Visa products to extend provisional credit for losses from unauthorized card use within 5 business days of notification of the loss. Many institutions will provide replacement funds even faster, sometimes within 24 to 48 hours.

What if the network or the merchant experiences a “computer glitch?” That’s doesn’t necessarily mean the account is “compromised.” But this is exactly what happened recently, although the problem appears to be due to the merchant rather than the network.

On Saturday, December 20, one of the biggest shopping days of the year, stores in Macy’s Central and East divisions experienced a period of almost two hours during which customers who completed purchases using a debit card were charged twice.

As a result, their bank accounts were debited twice as much as they expected, and as a result of this, many people were slapped with overdraft fees by their banks.

A Highland Village woman said her son bought her a set of knives for Christmas at Macy’s at Vista Ridge Mall in Lewisville [Texas]. She said he spent $78 for the gift, then later discovered that another $78 had been debited from his checking account. He was eventually charged $50 in bounced-check fees, said the woman, who didn’t want to be identified.

Following, there was aggravation and inconvenience. She, like everyone else who was unlucky enough to use a debit card in this situation, had to fax checking account statements. The store would take up to 10 days before refunding everyone’s overcharges.

Will the store pay everyone back for overdraft fees incurred due to duplicate charges? It’s not clear, but I wouldn’t count on it. This is a real life example of why you should avoid debit cards or any agreement where you authorize a merchant to automatically debit your checking account.

Use cash to ensure you always have the money available for your purchase. You’ll be sure the cashier won’t take your cash twice. Use a credit card to ensure you have protection for fraud and “computer glitches” and to put another layer between the merchant and your bank account. Monitor your accounts frequently to make sure you don’t see any unauthorized or suspicious activity.

Photo credit: akz*
Macy’s owns up to debit card glitch on Saturday before Christmas, Dallas News, December 30, 2008

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