debit cards

The Little Known Risk Your Business is Taking with Debit Cards

Angela Proffit rarely uses her business debit card. But one morning in December 2018, she was heading out for a long drive with a client of her consulting business. She had to fill up her gas tank and realized she had lent her business credit card to one of her team members, so she pulled out her debit card instead. As soon as she filled her tank, her phone alerted her to a purchase of $5.46. She didn’t recall a purchase of that amount, but since she was with a client, she made a mental note to follow up later.


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More alerts followed and before she could contact her bank, an employee of her bank called and shared the bad news: her business bank account had been compromised and her entire balance of some $35,000 was gone.

“I’ll never forget it,” Proffit said. “They told me, ‘your business bank account has been drained.’”

As it turned out, that one time she used her business debit card was on a gas pump where an illegal “skimming” device had been installed. It captured her account information and was used to access her account.

What Proffitt didn’t know at the time was that business debit cards aren’t covered by the same laws as consumer debit cards when it comes to loss or theft. In fact, there’s no federal law that covers debit card theft. That means financial institutions aren’t required to promptly credit accounts when business debit cards are compromised. (Consumer cards, by contrast, are covered by the Electronic Funds Transfer Act, which generally requires financial institutions to provisionally credit accounts within 14 days).

It took over a month and a half to get her money back. In the meantime, payments were bouncing and she scrambled to tap other funds. She also had to adjust all automatic payments coming from the account.

She found the process was a huge hassle. “They required me to come into the branch in person to fill out paperwork,” Proffit said. “I had clients to take care of, and I was traveling.”

Like many entrepreneurs, Proffitt is busy: she’s the founder of GSD Creative, a wedding and events expert, productivity consultant, speaker and designer. She’s also host of the Business Unveiled Podcast, dedicated to helping business owners fast track their businesses and lives.

Here, she shares her experience with credit fraud to warn other entrepreneurs so they don’t go through the same thing.


Related: 4 Smart Ways Business Owners Maximize Credit Card Rewards

Credit cards vs. debit cards

Unlike business debit cards—which are not covered by federal law in the case of fraudulent use—business credit cards are covered by the same law as consumer credit cards if they are used without authorization. The law that covers business credit cards is called the Truth In Lending Act, and it limits cardholder liability to $50 maximum. This makes business credit cards a safer bet than business debit cards.

To help protect herself and her business, she now does things differently. First, and most importantly, Proffit uses business credit cards, not business debit cards, for her business transactions. She also utilizes different cards for different purposes: When she travels, she uses a travel reward card. She gives a different card to team members, with lower credit limits.

She always uses two-factor authentication and has alerts on her accounts so she’ll be notified of unusual purchases. When one of her credit cards was used fraudulently, her credit card issuer immediately called her and they were able to stop further fraudulent use.


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If you’re a busy entrepreneur like Proffitt, make sure you are using the right cards in your business and taking advantage of alerts and security features.

“No one is going to take care of your business like you do,” Proffitt said. “Business owners need to understand how to protect themselves.”

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