If you see monthly charges for services you didn't agree to or canceled, you might be caught in an automatic withdrawal scam.

Setting up automatic withdrawals for bills like gym memberships and loans can simplify your finances, but it can also be an opportunity for scammers. Learn how to recognize automatic withdrawal scams and keep your money safe.

How Automatic Withdrawal Scams Work

Businesses don't always need a signed check to withdraw funds from your account. They can use your account information to create a demand draft. This is a simple process, and scammers try to take advantage of it. However, by law, they must have your authorization first. Here are a few ways automatic withdrawal scams can happen:

  1. Free Trial Offers
    When you sign up for a free trial, you might be asked for your account information. Even if you cancel before the trial ends, the company keeps charging you. While the charges may be small initially, they can accumulate over time.

    To avoid these scams, deal only with businesses you trust.

  2. Credit Card Offers
    You might receive an offer for a loan or credit card, especially if you have bad credit. To verify your relationship with a financial institution, you're asked for your checking account information. Scammers then use this information to make unauthorized withdrawals.

  3. Prize Winnings
    Scammers may contact you, claiming you've won a fake prize or lottery, but they'll ask for your banking information to cover taxes or processing fees. In reality, there's no prize, but money is withdrawn from your account.

How to Protect Yourself

To protect yourself from automatic withdrawal scams, remember these tips:

  • If someone calls and asks for your account info for "verification," be skeptical. Only share your account information when you intend to make a payment directly to a business.

  • Always read the fine print of any offer, especially those related to services you're signing up for. Ensure you understand the cancellation process.

  • When filling out online forms, keep an eye out for pre-checked boxes that enroll you in automatic billing or additional services you don't need. Uncheck them if necessary.

  • Research the business to confirm it's trustworthy. You can easily check their reputation with a quick online search.

  • Regularly review your checking account for unfamiliar transactions. If you spot unauthorized charges or, worse, find your account overdrawn due to them, take immediate action.

How to Stop Unauthorized Withdrawals

To protect yourself from unauthorized withdrawals, you have some safeguards if you act quickly. Here's what you should do:

  • Contact your financial institution immediately when you spot unauthorized charges. They might ask for a document called an "affidavit of unauthorized use."

  • To prevent future unauthorized charges, you can ask your financial institution for a stop payment. Keep in mind there may be a fee for this service.

  • If you initially authorized automatic withdrawals but now want to stop them, reach out to the business as soon as possible.

  • Follow up in writing to have proof that you've revoked permission for the business to withdraw from your account. Always keep a copy of your request.

  • If the business doesn't cooperate, reach out to your financial institution for assistance.

What to Do If You’ve Been the Victim of a Scam

Here are some steps to take if you’ve been scammed:

To steer clear of these scams, stick to businesses you trust and learn how to recognize potential scams. This way, if an offer seems fishy, you'll know how to avoid it. If you want to know more about safeguarding your information, get in touch with your financial institution today.

Small Charges Can Turn into a Big Problem

Even if each automatic withdrawal is just a little bit of money, those charges can pile up over time. Some people might not even realize they're being scammed for a while.