Electronic Fund Transfer Act

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 What Is the Electronic Fund Transfer Act (EFTA)?

Numerous banking laws that govern financial issues, including the Electronic Fund Transfer Act (EFTA). The EFTA outlines procedures for resolving errors on electronic fund transfer account statements, including the following:

  • Electronic fund transfers that an individual has not made;
  • Incorrect electronic fund transfers;
  • Omitted electronic fund transfers;
  • Failure to reflect electronic fund transfers properly;
  • Electronic fund transfers for which an individual requests an explanation or documentation because of a possible error.

The EFTA applies to electronic fund transfers, including those that involve:

  • ATMs;
  • Debit transactions;
  • Other electronic banking transactions resulting in the withdrawal of cash from an individual’s account.

If an individual is having issues with an electronic fund transfer (EFT) on their account, they can contact an EFTA lawyer. A lawyer will advise them of the laws that apply and the steps they can take to correct the issue.

What About Correcting Bank Account Errors?

Finding an error on a bank statement can be frustrating. If an individual does find an error, they should quickly provide a detailed notice regarding the issue.

There are laws governing correcting bank account errors, including the EFTA, but they require the individual to take prompt action. The EFTA provides individuals with protections if they experience a mistake or an unauthorized withdrawal from their bank account.

Several requirements and steps will occur during the process, including the following:

  • The individual must describe the error to their financial institution within 60 days of discovering it;
  • Following this, the financial institution must investigate the error and resolve it within 45 days;
  • The bank is required to refund the amount in question if it takes more than ten days to resolve the matter;
    • The bank may have 90 days to investigate an error, such as a mistake in opening a new account or an international transaction; and
  • At the end of its investigation, the financial institution must explain its findings to the individual, regardless of whether it found an error;
    • If the bank does find an error, it must correct it immediately.

An individual may be able to limit their financial losses if their ATM or debit card is stolen or used fraudulently by notifying their financial institution within two business days.

If they do so, their loss will be limited to $50. If an individual fails to notify their financial institution within two business days, they should still do so because their losses can be limited to $500.

It is important to note that if the individual does not notify their financial institution within 60 days of receiving a financial statement showing an illegal withdrawal, their potential losses will not be limited.

How Soon Should I Dispute a Bank Error?

In order for an individual to maximize the chances of resolving their issue, they should notify their bank as soon as they can. If an individual receives an incorrect statement, they should report it to their bank within 60 days.

This 60-day period begins with the statement on which the credit should have appeared if that credit was not posted. The error notice should be sent to the statement address of the bank.

The notice should include the following information:

  • The individual’s name;
  • The individual’s account number;
  • Other necessary identifying information;
  • A statement that a billing error occurred, including:
    • the type of error;
    • the date of the error; and
    • the amount of the error.

It is also important to prepare and make copies of any documents that support the individual’s claims, which may include receipts or earlier confirmations of payment.

What Are the Bank’s Obligations?

When a bank receives an individual’s timely billing error notice, they are required to notify the individual within 30 days unless the billing error is resolved during that period. In the majority of cases, the bank is required to resolve the error within two billing cycles and no later than 90 days after receiving the notice.

If the error involves an unauthorized electronic transfer, the bank is required to respond quickly. An electronic transfer may be initiated by the following:

  • At an ATM;
  • By telephone;
  • Online.

An electronic transfer error has to be investigated by a bank within ten business days of receiving the billing error notice. After discovering the error, the bank has to inform the customer within three days as well as issue a final correction within one day.

What Are My Rights as a Consumer?

During the dispute resolution process, the bank must follow certain rules as well as to respect the individual’s rights as a consumer. An individual is free to withhold any portion of the payment that is related to the disputed amount.

If an individual does withhold a portion of the payment that is related to the disputed about, the bank is not permitted to do the following:

  • Collect the disputed amount;
  • Make a negative report on the individual’s credit history or threaten to do so; or
  • Close, restrict, accelerate, or report a delinquent bank account.

If the bank cannot resolve the dispute involving an electronic transfer within ten business days, they must provide an individual with a provisional credit for the amount disputed. If an individual’s complaint is valid, the bank is required to correct the error and credit the account with the disputed amount.

As a result of the error, the bank is required to reimburse an individual for any overdraft or minimum balance fees they incurred. If the bank does not find an error, it is required to notify the individual and explain why it believes the alleged error is incorrect.

An individual has the right to request a copy of the documentary evidence the bank used to make this determination.

How Do I Take Advantage of the EFTA?

As discussed above, there are certain steps an individual should take under the EFTA if they believe there is an error with their account statement, including the following:

  • Notifying the individual’s financial institution no later than 60 days after the statement was sent;
  • Follow-up in writing;
  • Regarding retail purchases, an individual’s financial institution has up to 10 business days to investigate after receiving the notice;
    • Within three days of completing its investigation, an individual’s financial institution must tell them the results;
  • Any error must be corrected within one business day after determining there is an error; and
  • The financial institution may take up to 90 days to complete its investigation if it needs more time. However, it must return the money in dispute to the individual’s account while the investigation continues.

What Do I Do if I Lost or Somebody Stole My EFT Card?

When an individual’s credit card is lost or stolen, their losses are limited to $50 per card. With an EFT card, the individual’s liability for an unauthorized withdrawal may vary based on a number of factors, including the following:

  • They may be limited to $50 if they notify the financial institution within two business days of learning of the loss;
  • They could lose up to $500 if they do not tell the card issuer within two business days;
  • They could lose all the money in their account, plus their maximum overdraft line of credit, if they do not report an unauthorized transfer on their statement within 60 days after the statement is sent to the individual.

It is important to note that the EFTA prohibits a creditor from requiring an individual to repay a loan or other credit by EFT, with some exceptions. In other words, an individual is not required to use EFT.

Do I Need a Lawyer Experienced With Credit Issues?

If you are experiencing an issue with an electronic fund transfer, it is important to consult with a financial lawyer. Your lawyer can advise you of the risks of using EFTs and what rights you have when you do decide to use them.

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