One day, Carole McClanahan was scanning her bank statement, and to her surprise, "I had a charge taken off my, out of my checking account for 139 dollars." She didn't buy anything for that amount and had never even heard of the company!
Carole McClanahan, Check Fraud Victim: "They explained to me that they, I had ordered some medicine from them which I had not and I was pretty upset about it."
And then it happened again. More money wiped out, more mysterious companies! "$14.95, $29.95, $29.95 and then $299 dollars." Carole's not alone. In fact, new research shows nearly two million Americans have had money taken straight out of their checking accounts without their authorization in the past year.
Howard Beales, Federal Trade Commission: "Consumers need to be very careful about checking their monthly statements."
The Federal Trade Commission warns bank account information is being passed around illegally. "Unfortunately, there's a, there's a thriving black market in account number lists of all sorts, and you know that's out there and available over the internet to bad guys."
How could your information get onto a black market list? Thieves can lift it off a check. It can be pulled from unsecure websites, or through telemarketing scams. "Sometimes they'll trick the consumer into giving them the account number." The account number and the routing number, all part of the long string of numbers printed right on the bottom of your check. Consumers Union says, that's all anyone needs to unlock your account.
Gail Hillebrand, Consumers Union: "Anyone who touches your check can pick this information up off your check and engage in fraud." And then, withdrawals can be made electronically, or through something called a demand draft, where a company sends your bank what looks like a check - but no signature is needed. Hillebrand says, "the person who originates the check is supposed to have your oral authorization. But, the problem is the banks don't check when they get these."
The American Bankers Association admits it's a system based on trust.
Nessa Feddes, American Bankers Association: "There are ways to penetrate some of the weaknesses."
But the industry says you are protected by law. If your account is targeted, contact your bank immediately and an investigation will be launched. Feddes says, "consumers are never responsible for unauthorized transactions. The most you can be liable is 50 dollars as a general matter." But as Carole learned, the process can be a hassle, and cost you a lot of time. She closed her account and is now working with her bank to get her money back. "My main concern is that it won't happen again."
It is critical to keep a close eye on your accounts since there are time limitations for recovering lost funds. If you start seeing a pattern of unauthorized withdrawals, report it, and then close your compromised account and open a new one.