Beware of Automatic Bank Account Debit Scams

'Just Give Me Those Numbers on One of Your Checks'

Don’t Help Scammers Rob Your Bank Account, FTC Warns. Michael Buckner/Getty Images

Looks like fraudulent telemarketers have come up with a way to cut to the chase and simply steal money straight from your bank account. According to the Federal Trade Commission (FTC), consumers nationwide are reporting unauthorized automatic debit withdrawals from their checking accounts.

Many consumers authorize automatic withdrawals as a legitimate and convenient way of making recurring bill payments, like mortgage or car payments.

But in those cases, the withdrawal arrangement is the consumer’s idea, not some telemarketer’s.

How the Scam Works

You get a phone call congratulating you for winning a nifty free prize or being pre-qualified for a major credit card, regardless of your credit rating. If you do anything but hang up, the telemarketer will immediately ask, “Do you have a checking account?” If you say you do, the telemarketer will explain the details of the offer, which of course, will sound too good for any sensible person like you to turn down.

Also See: Do Not Call List is Free: FTC Warns of Scam

After the pitch, the telemarketer will ask you to get one of your checks and to read off all of the numbers at the bottom. Those numbers are the bank’s routing number and you account number. Does this sound dangerous yet? Totally deceptive telemarketer will either not tell you why the numbers are needed or that they are needed to verify your eligibility for the offer.

In rare cases, a legitimate telemarketer will honestly tell you that the information will allow them to debit your checking account. But even knowing this, many victims still find the offer too good to stop before it’s too late and give up their account numbers anyway.

Also See: How to Make A Telemarketing Complaint

With your account numbers, the telemarketer can now set up a “demand draft” withdrawal, which your bank process like a check, except that unlike a check, payment 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,” states the FTC, adding, “You may not know that your bank has paid the draft until you receive your bank statement.”

The scam ends with money quickly vanishing from your checking account.

How to Protect Yourself

While it can be hard to detect the automatic debit scam before your money starts going away, The FTC offers suggests some things you can do to avoid becoming a victim in the first place:

  • Never give out your checking account number over the phone unless you know the company and clearly understand why the information is necessary.
  • Remember that legitimate companies will never ask for your bank account information unless you have expressly agreed to the automatic withdrawal payment method.
  • If someone says they are taping your call, ask why. Don't be afraid to ask questions.

What the Law Says

According to the FTC, “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.”

Also See: Robocall DOs and DON’Ts

If you believe you are a victim of the bank account debit scam or have been contacted by one of the scammers, you can report it directly to the FTC via the agency’s Online Complaint Assistant.