Still writing checks? Watch out.

When Mary Ellen Corbett recently scanned her bank statement, she noticed a number of deductions from her checking account that she never authorized. It wasn't just one merchant - and it didn't happen just once.

"At first, I was just curious as to why this was happening," says Ms. Corbett, a journalist from Silver City, N.M. "But then I became angry. I see this as an invasion of my privacy and I question the legality of any creditor accessing my account electronically without my authorization."

Corbett's experience is not unusual. Indeed, as banks move away from paper-based transactions, their customers increasingly are bumping into the same problem. The checks they write become, instead, an electronic debit. And the practice is perfectly legal, unless accountholders object.

Worse, it and other industry measures that take effect this fall could boost checking-account fraud. Even the check-processing industry now suggests you guard account numbers as closely as any sensitive personal information. And if you don't know the merchant, don't use a check, industry officials warn, because it doesn't offer the same consumer protections of a credit card.

"These automatic deductions are obviously much more efficient for the bank and the creditor," says Mark Budnitz, a professor at Georgia State University College of Law and a board member of the National Consumer Law Center. "It saves them money but it also creates more opportunities for checking-account fraud."

Under federal law, creditors must disclose any automatic deductions to a customer's checking account. Electronic payments can be authorized by signing a form or attaching a voided check. But as Corbett learned, a creditor does not have to get written authorization from a consumer. Instead, it is up to the consumer to object (preferably in writing) to the proposed transaction.

And the electronic trickle is becoming a flood. Because of the nation's wide acceptance of online banking and the huge increase in the volume of automated checking-account withdrawals and deposits, the system that processes these requests is now clearing 10 billion electronic transactions a year.

Because of these changes, the Federal Reserve warned banks last year that "dishonest persons are using the automated clearing house to originate unauthorized debits."

Consumers have some protection against checking-account fraud in the Electronic Fund Transfer Act and the Uniform Commercial Code. For electronic debits, provided that you notify the bank right away, the bank typically is required to "recredit" your account with the missing funds - within 10 business days while it investigates.

"The law makes it necessary for consumers to check their bank statements often, so that any instance of checking-account fraud can quickly be brought to the bank's attention," says Professor Budnitz.

While banks are supposed to refund any unauthorized checking-account withdrawals, there are fewer consumer protections than there are for fraudulent credit-card charges. Furthermore, if the bank decides the charge is valid, it can take the money out again.

"If you are unsure about the merchant, never use a check - use a credit card instead," says George Thomas, president of the Electronic Payments Network, a division of the Clearinghouse, the largest private check processing system, owned by many of the nation's largest banks. "That way, you can avoid the possibility of checking-account fraud down the road."

Consumer advocates warn that you can expect even more incidents of checking-account fraud with the Check Clearing for the 21st Century Act or "Check 21," slated to take effect Oct. 28. The new law represents a death knell for the process of banks returning original checks to consumers with their monthly statements or even when there is a problem with a particular check. Instead, if consumers want to inspect checks for forgeries or alterations or to present a canceled check as proof of payment, they usually will have to be content with a new payment instrument called a "substitute check" (based on a digital image of the original check).

The main goal of Check 21 is to avoid the necessity of original paper checks being physically transported all over the country and instead to facilitate the electronic transfer of an image or other information about a check.

For consumers, the major disadvantages of the new Check 21 system are twofold: First, it will become more difficult to spot and prove forgeries and check alterations and second, the speed of electronic transfers will decrease the "float" that enables consumers to keep their money in their account for a number of days until the check they have written clears. Experts say that the provisions of the act, while they provide for a type of recredit for consumers who dispute a charge, may be weak.

Bankers are calling Check 21 the biggest change they have seen in 30 years and hope it goes smoothly. But even some industry leaders are concerned about its implementation.

"It could lead to an increase in checking account fraud - especially with corporate accounts," says Mr. Thomas. "We've already seen this occurring more frequently over the past few years. This new law could make it more of a problem."

That's one reason NACHA, the electronic payments association, based in Herndon, Va., recommends on its website that consumers protect their checking account.

"It's fine to use your checking account information on the Web or over the phone to pay bills or to pay companies you know and trust," says Michael Herd of NACHA. "But you should safeguard your checking-account information, just as you would your address, phone number, Social Security number, and other account numbers."

Banking industry leaders and consumer advocates agree that the days are long gone when only banks had access to account numbers.

"There's no way of stopping this steamroller," Budnitz says. "In fact, there will be more efforts by the banking industry to increase this paperless society. We're always hopeful that we can roll something back."

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