Tuesday, December 11, 2007

Legal Thriller Author Urges Bank Account Protection From Scam Artists with Debit Block

--The following examines raids on consumer bank accounts by con men.

Wilma J., a former Pennsylvania real estate broker, placed a debit block on her bank account, but only after fraudulent withdrawals of $14,000 through debit card theft. "I didn't even know about debit block," she remorsefully admits. "If I had known, I could have saved myself a lot of money. I wouldn't have gotten cleaned out."

While on the subject of barn doors, locking, and disappearing horses, consider some of these additional debit card horror stories, as practiced by con men: An Ohio truck driver was cleaned of $19,000. A California high school teacher, $9,500. An Illinois Lutheran Minister, $6,000. An Arizona insurance agent, $11,000. Even a New York credit counselor, $18,300. These are just a few of the plentiful examples which move a grown-up to join the children, and cry.

Sadly, to go through the ritual of setting up a debit block is looked upon by many people as the equivalent of marrying someone your parents chose for you.It's not really all that bad. Try it. If you are one of the few who even know about this banking service, and, If your bank is one that offers it, it is nothing more than added identity theft insurance. We're not trying to sound like the sheep herder who cried, "wolf," here. But, if you wait until after the fact--until a raid is conducted against your bank account--trying to correct it would be like attempting to run the Marathon with a cracked shin bone.

With some 50% of all major U.S. corporations being hit up with unauthorized withdrawals last year, this lucrative reward for identity theft is now more widely used by con men to go after consumers too, yes, people just like you. Surprising it is, in light of this, that so few debit card users even know of the simple steps that can be taken to protect their accounts.

First, you might well say, I don't want any con men breaking the bank at my expense. How to prevent? Let's begin at the beginning. What is a debit block anyway?

An ACH block (Automated Clearing House) works like a stop-payment order on a check. So, how do you use it to protect everyday debit card transactions? A variety--or combination--of ways:

>You can allow no ACH debits to your account at all. Except your own, that is.This tightening of the screws puts out of reach your funds to all sources, both legitimate and illegitimate--prevents them from "tapping in" to your account. Not too practical, but effective. For con men, it totally denies them the intoxicating fragrance of easy money.

>You can set the block up to allow withdrawals only on certain dates of the month. This gives you a good measure of added protection, if only you know which days of the month your account will be active. Under this scenario you reverse the usual cat-and-mouse game with the con artist. You get to call the shots instead of him. You control the shell game yourself.

>It can be set up with a dollar limit, so that you cannot be cleaned out in one fell swoop. Limited in practicality, but effective in thwarting thieves. (Remember,you would be up against an adversary whose idea of the game is that it involves but one "sporting" gesture: when a victim is down, kick him.)

>You can structure it to allow payments to only payees on an approved list. These payees might include: your utility, phone, water, insurance providers, your daughter's private music instructor, and all others on your monthly billing cycle. Here again, you would be limiting yourself somewhat, in the name of protection against theft. For all the devil's inventiveness it's hard for con men to figure a way around this barrier.

These are just a few of the options you have. We're sure your friendly neighborhood banker would gladly provide more.

An oddity in our financial safety net--a big hole, really--is that credit card holders are liable (once quickly reported, a must) to a maximum of $50 in losses. On debit cards, however, you're on your own. With these, if you keep $30,000 in your account, that's how much you could lose.

The con men, in these days of such wide spread identity theft, are picking the low-hanging fruit. They are finding that these outrightly criminal withdrawals from bank accounts are as easy as stealing cookies from girl scouts.

You can't be the boy in the plastic bubble, insulating yourself from all perceived unpleasant realities, and their consequences Not when the remedy is so obvious. Satisfy yourself with knowledge. Study up on the subject. You don't have to be a victim. Not when it is so relatively effortless to set up your own debit block at your bank.


Anonymous said...

My sister's lumber company was being plagued by unauthorized withdrawals for a year, until they set up a debit block. It worked good. It cut these raids on their cash down to practically nothing. I guess there must be something to it.

Bern said...

This is an interesting concept.

ione said...

My banker in this one horse town seems to know nothing about debit block.

Jack Payne said...

There are still a number of small town and rural banks that do not get into debit block. Where you run into this it's best to switch to credit card usage to take care of bills and all drawdowns. Here you have the protection of the $50 maximum loss provision of the law on your side.

Edo said...

I used to be part of the banking industry so I find this material very interesting. I am aware of some of the concepts discussed, but def did not know others. Thanks for the info and I plan to use some of the tools you have laid out for us. Thanks.

The Uneasy Supplicant said...

Thanks Jack
This is good to know. Thanks for the info.Hasn't happened. Hopefully won't but if it does to me or anyone else I know I'll be sure to tell them what to do.

Jan Husdal said...

As a Norwegian, who used to live in the US some time ago, it was very interesting to see how different the banking industry is. Here, debit cards are the rule and "debit block" is not something that comes extra. It's there already. Before any company can post a withdrawal on my account I need to approve that company with my bank. In addition I need to set a maximal withdrawal amount, anything more than that will not be cleared. I've never heard of unauthorized withdrawals in my country, but there are plenty of other scams, like sending fake invoices, especially during the holiday season, when there is only temp staff around, who will clear the invoice because there is no one around to ask whether this is a legitimate invoice or not.