What Law Applies?
THE ELECTRONIC FUND TRANSFER ACT answers several basic questions consumers have about using EFT services.
A check contains information that authorizes a bank to withdraw a certain amount of money from one person's account and pay that amount to another person. Most consumer questions center on the fact that EFT systems transmit the information without the paper:
- What record will I have of my transactions?
- How do I correct errors?
- What if someone steals money from my account?
- What about mail solicitations for debit cards?
- Do I have to use EFT services?
Here are the answers the EFT Act gives to consumer questions about these systems.
What Record Will I Have of My Transactions?
A cancelled check is permanent proof that a payment has been made. What proof of payment is available with EFT services?
If you use an ATM to withdraw money or make deposits or a POS terminal to pay for a purchase, you can get a written receipt, much like a sales receipt you get with a cash purchase, showing the amount of the transfer, the date it was made, and other information. This receipt is your record of transfers initiated at an electronic terminal.
Your periodic bank statement must also show electronic transfers to and from your account, including those made with debit cards, by a preauthorized arrangement, or under a telephone transfer plan. The statement will also name the party to whom payment has been made and show any fees for EFT services (or the total amount charged for account maintenance) and your opening and closing balances.
How Do I Correct Errors?
The way to report errors is somewhat different with EFT services than it is with credit cards (see the section on correcting credit billing errors). But as with credit cards, financial institutions must investigate and promptly correct any EFT errors that you report.
If you believe there has been an error in an electronic fund transfer relating to your account:
1. Write or call your financial institution immediately if possible, but no later than 60 days from the date the first statement that you think shows an error was mailed to you. Give your name and account number and explain why you believe there is an error, what kind of error, and the dollar amount and date in question. If you call, you may be asked to send this information in writing within 10 business days.
2. The financial institution must promptly investigate an error and resolve it within 45 days. For errors involving new accounts (opened in the last 30 days), POS transactions, and foreign transactions, the institution may take up to 90 days to investigate the error. However, if the financial institution takes longer than 10 business days to complete its investigation, generally it must put back into your account the amount in question while it finishes the investigation. For new accounts, the financial institution may take up to 20 business days to credit your account for the amount you think is in error.
3. The financial institution must notify you of the results of its investigation. If there was an error, the institution must correct it promptly, for example, by making a recredit final.
If it finds no error, the financial institution must explain in writing why it believes no error occurred and let you know that it has deducted any amount recredited during the investigation. You may ask for copies of documents relied on in the investigation.
What about Loss or Theft?
It's important to be aware of the potential risk in using an EFT card, which differs from the risk on a credit card.
On lost or stolen credit cards, your loss is limited to $50 per card (see Lost or Stolen Credit Cards). On an EFT card, your liability for an unauthorized withdrawal can vary:
- Your loss is limited to $50 if you notify the financial institution within two business days after learning of loss or theft of your card or code.
- But you could lose as much as $500 if you do not tell the card issuer within two business days after learning of loss or theft.
- If you do not report an unauthorized transfer that appears on your statement within 60 days after the statement is mailed to you, you risk unlimited loss on transfers made after the 60-day period. That means you could lose all the money in your account plus your maximum overdraft line of credit, if any.
Example:
On Monday, John's debit card and PIN were stolen. On Tuesday, the thief withdrew $250, all the money John had in his checking account. Five days later, the thief withdrew another $500, triggering John's overdraft line of credit. John did not realize his card was stolen until he received his bank statement, showing withdrawals of $750 he did not make. He called the bank right away. John's liability is $50.
Now suppose that when John got his bank statement he didn't look at it and didn't call the bank. Seventy days after the statement was mailed to John, the thief withdrew another $1,000, reaching the limit on John's line of credit. In this case, John would be liable for $1,050 ($50 for transfers before the end of the 60 days; $1,000 for transfers made more than 60 days after the statement was mailed).
|