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Preventing ‘live check’ scams

Published (3/4/2010)
By Nick Busse
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If you receive a check in the mail from a company you don’t recognize or for reasons you don’t understand, cashing it may get you more than you bargained for.

“Live checks” are checks that obligate consumers to purchase goods and services they don’t necessarily want and may not even be aware of. They’re often mailed to people who purchased something with their credit card and then — unbeknownst to them — had their credit card information sold to a third party. The third party then tries to fool the consumer into purchasing other goods or services, and uses their credit card information to bill them automatically.

Rep. Andrew Falk (DFL-Murdock) argues live check solicitations amount to fraud, and he sponsors a bill that would protect consumers from them.

“By cashing that live check, you’re actually buying some service which you had no intention of purchasing in the first place,” Falk said.

HF2599 would make live check solicitation a “deceptive practice” under the state’s consumer protection statutes, giving the Office of the Attorney General authority to enforce penalties against offenders. The House Commerce and Labor Committee approved the bill March 2. It now awaits action by the full House.

Live checks typically contain fine print informing consumers that they’re obligated to purchase something, but consumers often don’t see it. Moreover, the checks are often disguised as a form of rebate connected with the original product the consumer purchased.

Within about a month after cashing a live check, a consumer will typically see charges appear on their credit card bill for purchases they didn’t know they were making, said Assistant Attorney General Kermit Fruechte.

He added that three states — Alaska, Nebraska and Utah — have passed similar legislation.

Sen. Kathy Saltzman (DFL-Woodbury) sponsors the companion, SF2439, which awaits action by the full Senate.

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