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.
While automatic debiting of your checking account can be a legitimate
payment method (many people pay mortgages or make car payments this
way), the system is being abused by some 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 initiate the call or
are familiar with the company. Remember, if you give your checking
account number over the phone to an unknown person for "verification"
or "computer purposes," that person may use it to improperly take
money from your checking account.
How the Scam Works
The new telemarketing scam usually works like this. 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, making it sound 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.
Sometimes you may not be told why this information is needed. Other
times you may be told the account information will help ensure that
you qualify for the offer. And, in some cases, the telemarketer may
explain that this information will allow them to debit your checking
account and ship the prize or process the fee for the credit card.
Once the 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
What You Can Do to Protect Yourself
Automatic debit scams involve a fraud that is hard to detect and
could expose you to large financial losses. However, the following
suggestions may help you avoid becoming a victim.
* Do not give your checking account number over the phone in
response to solicitations from people you do not know.
* If anyone asks for your checking account number, ask them why they
need this information.
* Beware of offers that sound too good to be true, especially any
offers that require your checking account number. Ask to review the
company's offer in writing before you agree to a purchase.
What to Do if You are a Victim
If a telemarketer has issued a draft against your checking account
without your knowledge or permission, or the amount is more than you
authorized, contact your bank immediately. Depending on the timing
and the circumstances, you may be able to get your money back. You
also may want to contact your local consumer protection agency, state
Attorney General and the Better Business Bureau to report the
You also may file a complaint with the FTC by writing to:
Correspondence Branch, Federal Trade Commission, Washington, DC
20580. Although the FTC generally does not intervene in individual
disputes, the information you provide may help to indicate a pattern
of possible law violation requiring action by the Commission.
Facts for Consumers from the Federal Trade Commission
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