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Automatic Withdrawal / Deposit Scam


A current scam called the 1-cent deposit scam has been going around. This scam involves Automated Clearing House transactions. ACH is an electronic network of financial transactions. Because ACH transfers clear electronically, people are not asked to verify the transactions.

The current scam involves a company that uses a computer program to generate bank account and routing numbers. They automatically deposit $.01 into each randomly generated account. The thieves then know that each accepted transaction is a valid account which they then make withdrawals from. One of the current thieves perpetrating this fraud calls itself Equity First (see Note at bottom of page). The withdrawals they have made are all $124.90, and seem to happen near the beginning of the month. They usually tap each account once and move on, but they sometimes hit accounts multiple times.

Because these are randomly generated account numbers (I’m sure they have an accurate listing of valid bank routing numbers, which is pretty much public information) I’m not sure what defense most people have against this. This is not your normal phishing scam or identity theft.

The best defense is to regularly monitor your accounts and be aware of any recent deposits and withdrawals that you do not expect or from companies you are unfamiliar with. Most banks have an on-line guarantee, so if you spot this sort of activity and promptly report it, you may not actually lose your money permanently. However, thieves will have a valid account and routing number, so you would likely have to change your account within your bank. It’s a hassle, but well worth protecting your assets!

Note: There is a company called Equity 1st Mortgage based in Wilmington North Carolina, and only licensed to do business in NC. This is not the company perpetrating this scam, and the scam seems to be focused outside of NC. Equity 1st has received well over 100 phone calls in regard to this scam and advises people to contact their bank for further action.

Published or updated December 9, 2010.
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