Giving your mortgage or utility company the green light to deduct payments automatically from your checking account saves you the hassle of sending a check every month. But it's just as easy for an illegitimate telemarketing firm to get into your checking account once it has your account number.
David Benavides of Gaithersburg, Md., thought he was getting a sweet deal on a magazine subscription from a telemarketer late last year. So he gave authorization over the telephone for a one-time debit of $18 from his checking account and assumed that was that.But when he got his bank-account statement, he noticed that $229 had been transferred to Magazine Distributors of America.
Benavides is one of a growing number of consumers hit by fraudulent firms that get checking-account numbers by promising "discount" magazine subscriptions or nonexistent "sweepstakes winnings."
Once they have your account number, they send your bank a simple form authorizing an automatic transfer to a bank where they have a business account. The money can be transferred out of your account and into theirs within 48 hours.
The Federal Trade Commission filed complaints against Magazine Distributors of America and several other telemarketing companies in March, alleging misrepresentation and unauthorized debits - which the commission says were sometimes as high as $2,000.
The FTC requires telemarketing firms to obtain recorded or written authorization from consumers before debiting an account. But they don't have to turn over the authorization unless a bank asks for it.