A recently filed putative class action demonstrates the risk all companies face when accepting electronic checks by phone. While most companies agree to accept electronic checks by phone only as a convenience to customers, these transactions are governed by a confluence of financial regulations replete with thorny traps for the unwary. In particular, recurring electronic withdrawals from a consumer’s checking account must be authorized in a writing signed or similarly authenticated by the consumer.

While the definition of “similarly authenticated” is subject to some interpretation, an audio recording of the consumer’s verbal consent is arguably not sufficient.