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Question & Answer

Question: Visa Security has uncovered a new scheme in which various telemarketers are using Demand Drafts to debit personal checking accounts. They offer consumers low interest rate Visa credit cards, and encourage the consumer to authorize a debit from their personal checking account to pay for the service. The telemarketer does not ask for the credit card number, but requests the "series of numbers from the bottom of one of your personal checks."The account information is then magnetically encoded onto a demand draft, and put through the work like a check. In some instances, consumers have received a Western Union Priority Letter thanking them for their purchase and requesting that the letter be signed and returned to "activate" a money-back guarantee. This may be done in a effort to obtain a signature.

If the consumer disputes the transaction, ultimate liability may reside with the telemarketer's depository financial institution.

Please caution your readers to be alert to the possible negative consequences of telemarketers using these payment methods. Visa and its member financial institutions neither sanction nor authorize the activities of these telemarketers.

Allan Trosclair, V.P.-Security

Answer: There is the possibility of a battle on who is liable here if the demand draft comes through encoded, but bearing a forged signature. If you have seen any of these drafts, please let Allan know. He can be reached at 415-358-2942.

Copyright © 1991 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 2, No. 3, 4/91

First published on 04/01/1991

Filed under: 
Filed under security as: 

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