It is frustrating when your bank makes a mistake on your account statement. The best way to address a mistake on your account statement is to send a quick and detailed notice.
Finding billing errors on a bank statement can be tiring, especially because security and accuracy are the main functions of a bank. While laws protect consumers against bank account errors, receiving the full benefit of such protections requires prompt action.
How Are Bank Errors Corrected?
The Electronic Fund Transfer Act establishes protections and procedures for consumers who have experienced mistakes or unauthorized withdrawals on their bank account.
If you feel your bank account has a mistake on it, you must follow these procedures to be legally protected:
- Write or call your financial institution within 60 days of discovering the mistake and describe the error.
- The financial institution is then required to investigate the error and resolve it within 45 days. However, if the bank takes longer than ten days to resolve the matter, it generally must put the amount in question back into your account. For some matters, such as an error in opening a new account or an international transaction, the bank may be afforded 90 days to investigate the error.
- The financial institution must explain its results to you at the end of its investigation, regardless of whether it found an error. If the bank found an error, it must immediately work to fix it.
If your ATM or debit card has been stolen or used for identify fraud, limit your financial loss by:
- Notifying your financial institution within two business days. If you do this within those two days, your loss will be limited to $50.
- Even if you did not notify your financial institution within two business days, you should still notify your financial institution because your loss will be limited to $500. If you do not inform your financial institution within 60 days of receiving the statement that contains an illegal withdrawal, your potential loss will not be limited by the bank.
What Do Bank Billing Errors Look Like?
The majority of bank billing errors involve open-end credit. Open-end credit is consumer credit extended by a bank in which:
- The bank reasonably expects repeated transactions
- The bank may charge occasional fees or interest on an unpaid balance
- The amount of available credit increases up to its original level as the outstanding balance is repaid
The most common example of open-line credit is a credit card or line of credit. Banks must send out periodic statements to all customers with open-end credit. Always pay close attention to make sure your periodic statement correctly reflects the activity on your account.
Your ability to correct billing errors depends on how fast you catch them. Billing errors include charges by unauthorized third parties, missed credit for payments received, debits for services you didn’t receive, and simple calculation errors.
When Should I Dispute a Bank Error?
You should inform your bank as soon as possible to maximize your chances of resolving your problem. Legally, you should notify your bank of any errors within 60 days of the bank sending you the erroneous statement. If the error is a failure to post a credit, the 60-day time limit runs from sending the statement in which the credit should’ve appeared.
You should send a notice about the error to the address seen on your bank statement. This notice should include your name, account number, or any other important identifier. The notice should also state that a billing error occurred and the type of error, the date, and the amount. Prepare copies of documents that support your assertion, such as receipts or earlier confirmations of payment.
What Are the Bank’s Obligations?
Once a bank receives your timely billing error notice, it must give you written knowledge within 30 days unless the bank resolves the billing error during that period. The error must usually be resolved within two billing cycles and never later than 90 days from when the bank receives your notice.
Banks are required to respond quickly if the error involves an unauthorized electronic transfer. ATM, telephone, or online may initiate electronic transfers. Banks must complete investigations of electronic transfer errors within ten business days of receiving a billing error notice. The bank must report the findings to the customer within three days and then issue a final correction within one day of determining the error.
What Are My Rights as a Consumer?
During the dispute resolution process, the bank must follow certain rules and respect your rights as a consumer. You may withhold any portion of the payment related to the disputed amount. If you withhold a portion of the payment related to the disputed amount, the bank cannot:
- Initiate collection actions for the disputed amount
- Make or threaten to make a negative report on your credit history
- Close, restrict, accelerate, or report your bank account as delinquent
If a bank cannot complete the dispute resolution process for an electronic transfer within ten business days, it must provide you with a provisional credit for the disputed amount. If a bank finds that your complaint is valid, it must correct the error and credit your account with the disputed amount. The bank must also repay you any related charges caused by the error, such as an overdraft or minimum balance fee.
If the bank finds that no error has occurred, it must notify you and explain why it believes the alleged error is incorrect. You have the right to request copies of the documentary evidence the bank used in making this determination.
What Happens if My Bank Finds No Error?
If a bank complies with all of its dispute resolution obligations and finds no error, it must promptly provide your payment due date in writing. The bank must break down the total amount you still owe. The bank must allow you time to pay the amount due without additional fees.
In most cases, the bank can start to report your account as delinquent within ten days after it delivers notice. You may delay this by sending further written notice that you still dispute a portion of the billing error.
How Can I Keep Track of My Financial Health?
Set up alerts on your bank account to keep tabs on your finances. Alerts on your bank account can help you spot errors or fraud right away and act quickly. You can set up bank account alerts through your bank’s website or app. Different banks offer different alerts. You can typically be alerted when your account balance is low or when a deposit or withdrawal is made. You can also receive alerts every time your debit card is used at an ATM.
Keep an eye on your credit report and credit score in addition to monitoring your bank accounts.
What Should I Do if I Feel My Financial Institution Has Violated My Consumer Rights Under the EFTA?
In addition to reporting the financial institution to the proper authorities, you may want to consult a financial attorney. You may be entitled to money damages in a lawsuit against your financial institution, and your attorney would be able to advise you of your rights and of the best way to proceed.