|Automatic Debit Scams -
have found yet another way to steal your money, this time from your
checking account. Consumers across the country are complaining about
unauthorized debits (withdrawals) from their checking accounts.
Automatic debiting of your checking account can be a legitimate payment
method; many people pay mortgages or make car payments this way. But the
system is being abused by fraudulent telemarketers. Therefore, if a caller
asks for your checking account number or other information printed on your
check, you should follow the same warning that applies to your credit card
number - do not give out checking account information over the phone
unless you are familiar with the company and agree to pay for something.
Remember, if you give your checking account number over the phone to a
stranger for "verification" or "computer purposes," that person could use
it to improperly take money from your checking account.
How The Scam Works
You either get a postcard or a telephone call saying you have won a free
prize or can qualify for a major credit card, regardless of past credit
problems. If you respond to the offer, the telemarketer often asks you
right away, "Do you have a checking account?" If you say "yes," the
telemarketer then goes on to explain the offer. Often it sounds too good
to pass up.
Near the end of the sales pitch, the telemarketer may ask you to get one
of your checks and to read off all of the numbers at the bottom. Some
deceptive telemarketers may not tell you why this information is needed.
Other deceptive telemarketers may tell you the account information will
help ensure that you qualify for the offer. And, in some cases, the
legitimate telemarketer will honestly explain that this information will
allow them to debit your checking account.
Once a telemarketer has your checking account information, it is put on a
"demand draft," which is processed much like a check. The draft has your
name, account number, and states an amount. Unlike a check, however, the
draft does not require your signature. When your bank receives the draft,
it takes the amount on the draft from your checking account and pays the
telemarketer's bank. You may not know that your bank has paid the draft
until you receive your bank statement.
What You Can Do To Protect Yourself
It can be difficult to detect an automatic debit scam before you suffer
financial losses. If you do not know who you're talking to, follow these
suggestions to help you avoid becoming a victim:
Don't give out your
checking account number over the phone unless you know the company and
understand why the information is necessary.
If someone says they are
taping your call, ask why. Don't be afraid to ask questions.
Companies do not ask for
your bank account information unless you have expressly agreed to this
Since December 31, 1995, a seller or telemarketer is required by law to
obtain your verifiable authorization to obtain payment from your bank
account. That means whoever takes your bank account information over the
phone must have your express permission to debit your account, and must
use one of three ways to get it. The person must tell you that money will
be taken from your bank account. If you authorize payment of money from
your bank account, they must then get your written authorization, tape
record your authorization, or send you a written confirmation before
debiting your bank account. If they tape record your authorization, they
must disclose, and you must receive, the following information:
The date of the demand
The amount of the
The payor's (who will
receive your money) name;
The number of draft
payments (if more than one);
A telephone number that
you can call during normal business hours; and
The date that you are
giving your oral authorization.
If a seller or
telemarketer uses written confirmation to verify your authorization, they
must give you all the information required for a tape recorded
authorization and tell you in the confirmation notice the refund procedure
you can use to dispute the accuracy of the confirmation and receive a
What To Do If You Are A Victim
If telemarketers cause money to be taken from your bank account without
your knowledge or authorization, they have violated the law. If you
receive a written confirmation notice that does not accurately represent
your understanding of the sale, follow the refund procedures that should
have been provided and request a refund of your money. If you do not
receive a refund, it's against the law. If you believe you have been a
victim of fraud, contact your bank immediately. Tell the bank that you did
not okay the debit and that you want to prevent further debiting. You also
should contact your state Attorney General. Depending on the timing and
the circumstances, you may be able to get your money back.
For More Information
The FTC works for the consumer to prevent fraudulent, deceptive
and unfair business practices in the marketplace and to provide
information to help consumers spot, stop and avoid them. To file a
complaint or to get
free information on consumer issues, visit
www.ftc.gov or call toll-free, 1-877-FTC-HELP
(1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet,
telemarketing, identity theft and other fraud-related complaints into
Consumer Sentinel, a secure, online database available to hundreds of
civil and criminal law enforcement agencies in the U.S. and abroad.