Often it’s tempting to loan a debit card to a friend, complete with pin number, so that a purchase can be made more conveniently. But this can lead to a number of complications and should be avoided as far as possible. As well, banks tend to dislike this practice and there can be trouble if it’s found out.
Debit cards directly access the card holder’s associated bank account. This may be a transaction account, or it may be a more substantial savings account, mortgage offset account, or even a home loan.
Especially with mortgage offset or flexible mortgage accounts, it can be difficult to tell if an extra purchase has been made until the bank statement arrives. Even with the bank statement, sorting everything out can be confusing. Statements usually only show the outlet where the purchase was made (and then not necessarily with the trading name) and this in itself is set amongst a number of other, non-debit card transactions.
Although it’s unlikely there has been outright fraud, it’s quite likely there will be some misunderstanding with a friend’s use of a debit card. The debit card can be used for a higher-cost purchase than the card holder expects, although the person lent the card thought the purchase was understood.
ATMs usage is another danger that should be remembered when lending a debit card. The card can be used to directly withdraw cash, and the pin number for making a purchase is usually the same one required to withdraw money from an ATM.
Lending out a debit card will almost certainly result in the cancellation of any zero liability guarantees provided by the debit card issuer. This guarantee means that when a card has an unauthorised transaction, the purchase will not be charged to the card holder’s account. These guarantees tend to be invalidated if the card holder co-operates with the person who commits the fraud. This includes lending the debit card, even if the purchase is not what was originally intended by the card holder.
