Money Mom’s Monday Tip: Read Your Bank Statements Carefully
Last week, the New York Times and other papers reported that at least one large bank knew that it was processing payments for a telemarketer who was charging consumer’s accounts even though the consumer never signed a check. Surprise – it is legal to charge a checking account without a check. This is done by creating an unsigned check which the telemarketer claims you orally authorized. These checks are also called “demand drafts” or “remotely created checks.” Just how these checks work was described in last week’s post: http://www.defendyourdollars.org/2008/02/telephone_check_could_the_wach.html
Your main defense against this scam and other kinds of frauds that can steal from your bank account is to read all your bank statements carefully, then and report and dispute any error, no matter how small. Thieves sometimes put through a small charge first, and if that works, try again with a larger charge. Fraudulent telemarketers may charge your account every month. The sooner you find the unauthorized charge, the sooner you can stop funds draining out of your account. Ask your bank to put the missing money back in your account. If they don’t do so, complain about your bank at: www.helpwithmybank.gov.
The bank regulators don’t have the best record of assisting consumers who complain, but Money Mom thinks that the more we complain about unfair practices in the banking system, the harder it will be for the regulators to ignore those practices. For more information on where to complain, depending on where you bank, see: http://www.consumersunion.org/pub/core_financial_services/001370.html.
Finally, to reduce the risk of a big chunk of your household funds going missing due to identity theft, and the delay and hassle of getting your money back, consider “layering” your accounts. This means keeping any funds you don’t need for day to day bill paying in a separate account that is not linked to the account from which you write checks and use your debit card.