Automatic Debit Account Scams

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 What is an Automatic Debit Account?

Automatic debit accounts are the same as regular personal checking accounts with accredited financial institutions. These days, many individuals use online banking and automatic bill pay.

An automatic debit account enables a consumer of services including cable, internet, and electricity to automatically have their bills deducted from their account on a monthly basis. This type of automatic bill payment allows a consumer to save time and money that they otherwise would have spent on postage stamps.

Many telemarketers, however, are taking advantage of consumers who use these automatic pay systems in order to steal money from their accounts.

What is Consumer Fraud?

Pursuant to consumer protection and fraud laws, consumer fraud refers to a certain type of criminal fraud. The victim of these scams is a consumer and the perpetrator is either a seller or advertiser of merchandise.

In general, as long as the fraud involves a type of service or good, it may be considered consumer fraud.

What are the Types of Consumer Fraud and Consumer Fraud Scams?

The definition of consumer fraud includes a wide range of activities. Examples of the more common consumer fraud scams include:

  • A seller not providing merchandise in an adequate fashion, for example, a car dealer selling lemon cars;
  • Sending merchandise to individuals without their knowledge and then forcing them to pay for it by threatening legal action against them or to ruin their credit ratings;
  • Sweepstakes and lotteries in the form of offering an individual a prize if they pay a fee, and then failing to deliver the prize; and
  • Charities that are only pretending to be working for a good cause, and ask the individual for a donation.

Specific types of consumer fraud include:

  • False advertising: False advertising refers to intentionally misleading a consumer about some aspect of a product that was instrumental in the consumer’s decision to buy the product;
  • Bait and switch: Bait and switch is a process of luring a consumer in with a great deal that is no longer available then offering different products; and
  • Pyramid schemes: A pyramid scheme refers to any type of promotion or unrealistic return where the only money made is the return on the funds of individuals who are newly recruited to the system. Pyramid schemes may also be referred to as multi level marketing, or MLM.

With specific consumer fraud scams, there are many different ways in which an individual may be a victim of fraud. Examples of the most common consumer fraud scams include:

How Do Credit Scams Work?

Telemarketing scams work in numerous different ways. The most common type of telemarketing scam that involves automatic debit accounts occurs when a telemarketer calls an individual claiming to be promoting a new credit card that has substantial benefits.

The telemarketer will want to verify the individual’s account by getting the account number of their checking account. This practice may lead to the individual giving up their account number in the hopes of qualifying for the new credit card.

What Steps Can I Take if I am Worried that I am a Victim of a Scam?

When a telemarketer initiates a scam against an individual’s checking account, there are a variety of steps an individual can take to put a stop to any harm that they suffered as a result of that scam, including:

  • Contacting their bank immediately: This will enable the bank to immediately stop all pending withdrawals on your account to prevent further damage; and
  • Contacting the local consumer protection agency: This will help to prevent future victims from falling into the same trap.

What is the Process for Filing a Consumer Fraud Complaint?

Consumer protection laws were enacted to protect the rights of consumers as well as to provide them with the ability to file consumer fraud complaints. In order to understand how to best file a consumer fraud complaint, it may be helpful for an individual to understand the applicable laws and rights of consumers.

The Federal Trade and Commissions Act (FTCA) outlines the industry standards for businesses. The Act prevents a business from making statements that may be misleading or confusing to the average consumer.

The Fair Packaging and Labeling Act is another important consumer protection law. This law regulates information that is presented on the packages of retail products.

Examples of other issues that consumer protection laws may cover include:

  • False advertising and false business claims, as previously noted;
  • Breaches of consumer contracts;
  • Health and safety codes; and
  • Dangerous products and products liability issues.

It is not uncommon for a consumer claim to involve a violation of more than one consumer protection law.

What are Some Additional Consumer Rights?

Examples of additional consumer rights and individual may have include:

  • Cooling off period: The majority of states provide consumers until midnight on the third business day following the purchase of a product or service the ability to cancel the contract for any reason. This cooling off period and gives a consumer the chance to change their mind if they made the purchase without thinking ahead;
  • Shipping requirements: If a consumer orders a product to be shipped, the seller is required to ship to the consumer in the amount of time stated. If the seller is not able to ship the items within the specified timeframe, they must provide the consumer with notice and the option to cancel, or accept either a refund or a new delivery date;
  • Used car rule: According to the used car rule, a dealer is required to post a buyer’s guide on each vehicle. This guide is to disclose warranty and other important information about the vehicle so that the consumer may make the most informed purchasing decision; and
  • Mail fraud schemes: Companies are prohibited from sending consumers items in the mail that they did not order and then expect the recipient to pay for it.

One of the components of consumer fraud protection is filing a complaint for consumer fraud. The first step in this process is to contact the business that sold the item or performed the service and to inform them of the issue.

In order to assist an individual’s case, it is important that they keep a record of all communications regarding the issue. If the business does not take any action, the individual’s next step would be to write a letter of complaint to the business as well as to forward a copy on to their local Consumer Protection Agency.

Alternatively, an individual may forward a copy to the Better Business Bureau. Finally, if no action is taken by any party the individual has contacted, they may consider hiring an attorney to represent them and resolve their consumer fraud issue.

How Can I Protect Myself From a Scam?

Although a telemarketer is often a very good speaker and they are often able to convince many competent individuals, there are several steps consumers can take to protect themselves. These can include:

  • Never give out an account number over the phone to an unfamiliar individual; and
  • Ask to review a telemarketer’s offer by mail. This will allow the individual to read all relevant materials prior to giving away valuable credit information.

Should I Contact an Attorney?

If you believe you have been the victim of a scam, it may be helpful to consult with a consumer lawyer. Your lawyer can assist you if you are a victim of an automatic debit account and rectify your situation.

If necessary, your lawyer can bring a cause of action against a telemarketer to recover any losses that you incurred. If you have to appear in court, your lawyer will be there to represent you.

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