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AG Larry Long and First PREMIER Bank Sign Agreement to Promote Integrity of ACH Network...

Attorney General Larry Long and First PREMIER Bank Sign Agreement to Promote Integrity of ACH Network and to Help Educate Consumers

PIERRE, S.D. – Attorney General Larry Long and First PREMIER Bank in Sioux Falls announced today that the Bank has agreed to adopt a set of proactive measures designed to prevent fraudulent telemarketers from gaining access to consumers’ bank accounts. 

"Fraudulent telemarketers often use electronic withdrawals to take money from consumers' checking accounts," Long said. "This voluntary agreement addresses that type of fraud."

"This agreement does two things: First, it requires the Bank to tighten its screening process to prevent fraudulent telemarketers from gaining access to consumers' bank accounts," Long said. "Secondly, the agreement establishes procedures for monitoring electronic banking activity, which will allow detection of fraudulent telemarketers much more quickly than before."

Because of First PREMIER’s leadership role in the Automated Clearing House (ACH) Network, they implemented a variety of policies, procedures and controls prior to the Attorneys General involvement, which will prevent this type of activity in the future.

"First PREMIER Bank is a national leader in providing electronic banking services," Long said. "We are pleased that First PREMIER Bank is setting such a high standard for fraud prevention and detection, and we are hopeful that other banks will follow First PREMIER’s lead and become part of the solution."

The agreement is the result of an investigation of fraudulent telemarketing that was initiated by the Attorneys General in Minnesota and Iowa. The South Dakota Consumer Protection Division joined the investigation last year. 

The Attorneys General allege that several fraudulent telemarketers used deceptive sales pitches to induce consumers to reveal their checking account information. The fraudulent telemarketers then took that information and withdrew money from those consumers' checking accounts, using the banking industry’s electronic payment system, known as the ACH Network. The fraudulent telemarketers initiated the withdrawals from consumers' checking accounts by telling First PREMIER Bank that the withdrawals were legitimate. With the controls that the industry had in place at the time, First PREMIER Bank identified this activity and the questionable companies and ultimately stopped processing their ACH transactions. 

First PREMIER Bank was not directly involved with any telemarketing misconduct and assisted the Federal Trade Commission in connection with its investigation and prosecution of the telemarketers. Subsequently, the Bank responded to inquiries from the Attorneys General regarding the Bank’s origination of the ACH transactions for the telemarketers in question. 

The bulk of the telemarketing fraud occurred in 2001 and 2002, during a nationwide ACH "pilot program." First PREMIER Bank, and other banks in the ACH system, have since upgraded electronic banking technology and procedures to help reduce the chance of this type of telemarketing fraud. Consumers, however, must still be diligent, Long warned.

"Consumers must safeguard their personal information, including bank account information, to avoid telemarketing fraud," said Long. 

Attorney General Long offered several tips for consumers to avoid telemarketing fraud: 

Tips to Avoid Telemarketing Fraud:

  • Guard your account information. Be especially cautious when sharing your bank or credit card information over the phone - don’t give out account numbers unless you initiated the call and know who you are talking to.  
  • Thoroughly check your bank and credit card statements each month. Dispute any unwanted or unauthorized charges - contact the Attorney General’s Consumer Protection Division if necessary.  
  • Add your number to the FTC’s "Do Not Call" list. Some con-artists may ignore it and call you anyway, but it will help reduce unwanted calls. Go to www.donotcall.gov  
  • Take your time and do not feel pressured to make a quick decision. You can insist on getting the information in writing or simply hang up if you suspect a scam.  
  • Be cautious of "free trial offers." Some sellers start charging credit cards automatically after the trial period expires.

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