According to an article on MSNBC, however, this makes it a lot easier for people to make away with your hard-earned cash. Apparently, swiping your debit card at a merchant may result in your card number and PIN being stored on the same machine (as most merchants are unaware of the software settings which are supposed to be set so that this doesn't happen). This information allows someone to counterfeit a debit card with the information encoded on it and enables them to withdraw cash from any ATM, which is less risky than their having to go to a merchant and make a purchase in the case of stolen/counterfeit credit cards. Quite a few of the major American banks have been hit by this, including Citibank, Bank of America and Wells Fargo.
How can a stolen debit card be worse than a stolen credit card? As the article puts it,
Debit card theft can be far more severe than credit card theft for consumers. For starters, different consumer protections apply. Account holders are liable for only up to $50 of credit card fraud — but consumers can be liable for the entire balance of their bank account after debit card fraud, according to federal banking regulations. Many banks voluntarily extend credit card-style protection to debit cards, but they are not required to do so.Given how prolific NETS usage is here, I wouldn't be surprised if it happens here soon.
Moreover, debit/check/ATM card fraud means money is instantly missing from the consumer's account. That can lead to bounced checks and other hassles. In credit card fraud, consumers generally never lose the money and simply don't pay the bill for the fraud. Also, while most consumers have multiple credit cards, many only have one cash/debit card. If the account is suspended, they may not have access to the cash in their primary checking or savings account.