FTC FACTS for Consumers

FOR THE CONSUMER 1-877-FTC-HELP

www.ftc.gov FEDERAL TRADE COMMISSION

F raudulent 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.

TELEMARKETING

Automatic Debit Scams
Facts for Consumers

1-877-FTC-HELP FOR THE CONSUMER

FEDERAL TRADE COMMISSION www.ftc.gov

March 2000

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.