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.
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 payment method.
IT'S 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 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 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.
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.
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FEDERAL TRADE COMMISSION |
FOR THE CONSUMER |
1-877-FTC-HELP |
www.ftc.gov |
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March 2000
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