FIGHT BACK : DO SCAM ARTISTS HAVE YOUR NUMBER?

Byline: David Horowitz 

Many people think the only way a thief can rip off their checking account is to steal their checks and forge their signature on them. Wrong!

All a scam operator needs to loot your account is your name and account number. And if you give out that number over the phone, you may be the next victim of what's called ``draft fraud.''

The mechanism is one millions of Americans use to pay their mortgage and other monthly bills without writing checks - direct debit payments, also known as demand drafts. You authorize a creditor to make monthly withdrawals directly from your checking account, and your bank transfers the funds automatically.

The same system can be used to make one-time mail-order purchases. All the retailer needs is your account number and permission to make the withdrawal.

It's simple and convenient - as long as you're dealing with a reputable creditor or retailer. Unfortunately, unscrupulous telemarketers are using the same system to steal tens of millions of dollars from people's bank accounts every year. And according to the Federal Trade Commission, the problem is growing at an alarming rate.

The most common scam is the venerable old sweepstakes pitch. The caller tells you you've won a prize and that all you have to do to collect is provide your bank-account number ``for identification purposes'' or ``to verify your eligibility.'' The caller then issues a demand draft against your account for some sort of product or service, and the money is transferred by your bank to the caller's account.

It doesn't matter that you didn't sign anything or agree to the debit transaction. Once the caller has your account number, all he or she has to do is tell your bank you approved the draft, and the money is gone.

If you discover the theft and report it immediately, you'll probably get your money back. But in the meantime, you could be unknowingly bouncing checks and it could affect your credit rating. At the very least, you'll be left with a tangled mess to straighten out with your bank. And once your account number is out there, there's no telling how many times it may be passed around.

The FTC is cracking down on this kind of fraud. Last month, the commission filed charges against telemarketing firms in Oklahoma City and Georgia for misrepresentation and making millions of dollars in illegal bank-account withdrawals, mostly for magazine subscriptions. The FTC also plans to mail out more than a million tip sheets a month warning consumers about debit fraud.

The FTC's advice is simple. Guard your checking-account number the way you guard your credit-card numbers. Never give it out on the phone, and never use it as a means of identification. If you want automated withdrawals to pay bills or make purchases, be sure you're dealing with a reputable company, not just someone who solicits you by phone.

Hang up on anyone who tells you you've won a prize and wants your account number to process delivery. And if you discover an unauthorized draft on your statement, report it immediately to your bank and your state attorney general's office.

MEMO: David Horowitz's column appears on Saturdays.