Chase Urges Debit Card Customers to Keep PINs Secret at Checkout

A customer service recommendation mailed to former Washington Mutual debit card holders may have some ulterior motives, according to a feature article in American Banker. When Chase issued replacement debit cards to customers it acquired after WaMu's failure, the bank advised accountholders to avoid risking identity theft by selecting "credit" at retail checkouts instead of PIN-based "debit" transactions.

Chase's customer service alert suggests that identity thieves could view a PIN entered in an open area, then use cloned cards for transactions that would be difficult to dispute. Security and banking analysts interviewed for the story noted that requiring a PIN reduces merchant risk and lowers processing fees. Processing a debit card transaction using a signature-required credit card payment platform engages a different set of risk monitoring tools, but costs merchants significantly more in interchange fees.

Like other debit and credit card issuers, Chase earns a portion of the fees charged to retailers for the privilege of accepting plastic. Critics of the practice told American Banker that the bank's communication used fear to generate profits. However, with states debating how to increase protection against fraudulent debit card use, some security experts told the trade publication that hiding one's PIN in public could prevent accounts from being cleared out by thieves.

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Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.