Telemarketers Tapping Checking Accounts

Some boiler-room firms hawking credit cards and dream vacations over the telephone are withdrawing money from their would-be customers’ checking accounts without written authorization, investigators say.

Consumers make the withdrawals possible by disclosing their account numbers during the calls, according to banking industry, congressional and federal and state law enforcement officials. Customers are verbally agreeing to some of the withdrawals, but some are being made without customer approval.

Investigators, who discovered the latest telemarketing scam recently, said the unethical operators are encoding customers’ checking account numbers on demand drafts--forms that can be used to withdraw funds quickly. Often the marketers fail to deliver the promoted product.

Such drafts are used routinely by insurance companies, mutual funds and other legitimate businesses that have a customer’s signed authorization on file. This allows oral transactions that expedite payments when speed is important.

Meanwhile, victims of unscrupulous firms often don’t learn of such a withdrawal until they spot it on a monthly bank statement or, if in fact they have orally agreed to a charge, they fail to receive the promised product.

Typical pitches involve a low-fee, low-interest credit card, a dream vacation, a fur coat or even help in selling a used car, investigators have found.

“Direct debiting is the cutting edge of telemarketing fraud,” said Diana Maurer, an assistant attorney general in Colorado.

Rep. Ron Wyden (D-Ore.), chairman of the House Small Business subcommittee on regulation, said the newly discovered and apparently wide-ranging fraud technique shows “the growing sophistication . . . of boiler-room con artists to the new, electronic technologies which form the nervous systems of modern financial institutions.”

Wyden said some telephone sales firms have “an impressive array of electronic and computerized tools which literally unlock the bank’s safe.”

A recent FBI letter warned banks of losses that “could easily cost financial institutions and consumers millions of dollars in a very short period of time.” Banking officials said that in some cases financial institutions have absorbed the losses, but in other cases consumers never got their money.

The Federal Deposit Insurance Corp. has alerted banks that fraudulent companies “claim to have each consumer’s authorization to process the drafts, but the banks have received no written authorization from the consumers, and the consumers have not signed the drafts.”

Anthony Adamski of the FBI’s Financial Institutions Fraud Unit said FBI field offices have been investigating the problem for two months, but no federal prosecutions have been brought. He said the government could use wire fraud, mail fraud and bank fraud statutes to prosecute.

Adamski said “banks are doing more stringent screening and several have refused accounts” with suspicious telephone marketing firms since the alerts went out.

Spokesman John Hall said the American Bankers Assn. has urged banks to return to the old adage “Know your customer.”