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.
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
How The Scam Works
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
telemarketers' bank. You may not know that your bank has paid the draft
until you receive your bank statement.
What You Can Do To Protect
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
- 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 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:
- The date of the demand draft;
- The amount of the draft(s);
- The payors' (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;
- 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 refund.
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.