Automatic Payment Fraud

Automatic payment fraud is a fairly new form of theft in which a criminal steals money from your checking account through your bank''s automatic payment option. This form of payment has plenty of legitimate uses, including making bill payment easier.

However, thieves with access to your account information can easily exploit the convenience of automatic payment options for their own gains. Here are the facts about automatic payment frauds.

How Automatic Payment Scams Work

There are many variations to automatic payment fraud, but the ultimate outcome is the same: the criminal obtains your checking account information and uses it to withdraw funds. Most automatic payment scams require direct contact with the victim, either via e-mail or phone. Here are a few of the most common automatic payment scams:

• money transfer scams: An e-mail from an African prince or millionaire requests your help in transferring thousands or millions of dollars into a secure bank account, offering you a percentage of the transfer. In actuality, the criminal only wants you to hand over your checking information so he or she can clean you out.

• phishing: A fraudulent telemarketer offers you an amazing deal on a credit card. The thief asks you to read off the numbers on the bottom of your check to verify your checking account.

• false reward scams: A telephone call or postcard informs you that you have won a free prize. When you try to claim this prize, the crook requests your bank account information to complete the transaction.

How to Avoid Automatic Payment Scams

Always use extreme caution when divulging your checking account information. Here are some other tips for avoiding automatic payment scams:

• Cancel automatic payment options on your checking account if you don''t use them.
• Never give out your checking account information unless you know the company and you initiated the automatic payment.
• Shred check stubs when throwing them away.
• Whenever possible, keep your checkbook at home and away from thieves.

What to Do if Youre a Victim of Automatic Payment Fraud

If you are a victim of automatic payment fraud, contact your bank immediately. Your bank will likely put a hold on your account to ensure no more fraudulent transactions drain your account.

To guard yourself against further attempts to withdraw funds from your account, you bank will likely recommend that you close the account and open a new one with a new checking number. The bank typically initiates an in-depth fraud process to apprehend the criminal. If the bank rules that the withdrawals are fraudulent, they may restore the lost funds to your account, depending on the circumstances.

When banks or police departments apprehend automatic payment thieves, they will prosecute to the fullest extent of the law. Depending on the amount stolen through the automatic payments, criminals can expect to receive between 1 and 10 years in prison.

Resources

Federal Trade Commission (n.d.) Automatic debit scams. Retrieved March 17, 2008, from the Federal Trade Commission Web site.