Do not give out your checking account information over the
phone unless you know the company and understand why the information is
If someone says they are taping your call, ask why. Do not
be afraid to ask questions.
Legitimate companies will not ask for your bank account
information unless you have expressly agreed to the automatic debiting of your
Fraudulent telemarketers have found yet another way to steal
your money, this time from your checking account. A debit card is an electronic
card issued by a bank which allows bank clients access to their accounts to withdraw cash or pay for goods and services. Consumers across the
country are complaining about unauthorized debits 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 fraudulent telemarketers are abusing this method of payment. 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
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 yourself
It can be difficult to detect an automatic debit scam before
you suffer financial losses. If you do not know whom 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.
someone says they are taping your call, ask why. Do not be afraid to ask
do not ask for your bank account information unless you have expressly agreed
to this payment method.
It is the law
Under Wisconsin's Direct Marketing Law (Wis. Adm. Code ch. ATCP 127.10), 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
of the demand draft;
amount of the draft(s);
payers’ (who will receive your money) name;
number of draft payments (if more than one);
telephone 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.
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 is 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 Consumer Protection. Depending on
the timing and the circumstances, you may be able to get your money back.
The Fair Credit Billing Act (FCBA) (15 USC § 1601) and Electronic Fund
Transfer Act (EFTA) (15 USC § 1693), also known as Regulation E, offer protection if your credit, ATM, or debit cards are
lost or stolen.
Check your statements and report any unauthorized activities
to your bank immediately.
(Information taken from Federal Trade Commission fact sheet,
“Automatic Debit Scams.”)