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Avoid Phone Scams

By Crown Financial Ministries Fraudulent telemarketers have found yet another way to steal consumers’ money—this time from their checking accounts. Account holders across the nation are complaining about unauthorized withdrawals (debits) from their checking accounts.

Even though automatic debiting of checking accounts can be a legitimate payment method, some telemarketers are abusing the system. So, if a caller asks for your checking account number, debit card number, or any other information printed on your check, you need to follow the same warning that applies to your credit card—do not give checking account or debit information over the phone, unless you initiate the call and are familiar with the company. If you give your checking account or debit card number over the phone to an unknown person for verification or computer purposes, that person could use it to take money from your checking account improperly.

How it works
This telemarketing scam generally works in the following way. You get either a postcard or a telephone call saying that you have won a free prize or that you qualify for a major credit card, regardless of past credit history or credit problems. If you respond to the offer, the telemarketer will usually ask you right away, “Do you have a checking account?” If you say “yes,” the telemarketer then goes on to explain the offer and makes it sound too good to pass up.

Near the end of the solicitation, the telemarketer might ask you to get one of your checks or your debit card and read off all of the numbers to him or her. Sometimes you might 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 might explain that this information will allow him or her 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 doesn’t require a 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.

How 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 can help you avoid becoming a victim.

Don’t give your checking account number or debit card number over the phone to anyone in response to solicitations from people you don’t know. Ask them if you can record the conversation. If they say no or that it is not their policy to allow the conversation to be recorded, hang up.

If anyone asks for a checking account number or a debit card number, ask why that information is needed. If he or she can’t give you a reasonable answer, say that you will first have to clear it with the state attorney general’s office before you can give out any account information. Then ask for the company name, mailing address, telephone number, and principle owners or operators. That should end the conversation. If he or she says that you have to make a decision that day, end the conversation.

Beware of offers that sound too good to be true, especially any offers that require you to give your checking account number or debit card number over the telephone. Ask to review the company’s offer in writing before you agree to a purchase.

What to do if you become victimized
If a telemarketer has issued a draft against your checking account without your knowledge or permission, or if the amount is more than you authorized, contact your bank immediately. Depending on the timing and the circumstances, you might be able to get your money back. You also may want to contact your local consumer protection agency, state attorney general’s office, and the Better Business Bureau to report the telemarketer. You can also file a complaint with the Federal Trade Commission by writing (don’t call or e-mail) a letter to the Correspondence Branch, Federal Trade Commission, Washington, DC 20580. Although the Federal Trade Commission generally doesn’t intervene in individual disputes, the information you provide may help to indicate a pattern of possible law violation that requires action by the Commission.

There are hundreds of ways that unscrupulous telemarketing companies can separate you from your money. One of the most common methods is through telemarketers securing your checking account information any way they can and then submitting a demand draft to your bank. Although the scam is widespread, it can be prevented if you use wisdom and don’t give your checking account information or your debit card information to anyone you do not know.

The primary source of information for this article was two brochures published and distributed by the Federal Trade Commission: “Fraud by Phone” and “Swindlers Are Calling.” To obtain copies of each write to Public Reference, Federal Trade Commission, Washington, DC 20580.

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