Automatic Debit Scams
Fraudulent telemarketers 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.
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.
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.
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.
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 telemarketers' bank. You may
not know that your bank has paid the draft until you receive your
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 are talking
to, follow these suggestions to help you avoid becoming a victim:
give out your checking account number over the phone unless you
know the company and understand why the information is necessary.
says they are taping your call, ask why. Don't be afraid to ask
do not ask for your bank account information unless you have expressly
agreed to this payment method.
ITS THE LAW: 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:
of the demand draft;
of the draft(s);
(who will receive your money) name;
of draft payments (if more than one);
number that you can call during normal business hours; and
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 refund.
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.