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Consumer Handbook to Credit Protection Laws (Part 4)
...... be used when shopping to allow the transfer of funds from the consumer's account to the merchant's. To pay for a purchase, the consumer presents an EFT card instead of a check or cash. Money is taken out of the consumer's account and put into the merchant's account electronically.
Preauthorized Transfers. This is a method of automatically depositing to or withdrawing funds from an individual's account, when the account holder authorizes the bank or a third party (such as an employer) to do so. For example, consumers can authorize direct electronic deposit of wages, Social Security or dividend payments to their accounts. Or, they can authorize financial institutions to make regular, ongoing payments of insurance, mortgage, utility or other bills.
Telephone Transfers. Consumers can transfer funds from one account to another--from savings to checking, for example--or can order payment of specific bills by phone.
What Law Applies?
THE ELECTRONIC FUND TRANSFER ACT gives consumers answers to several basic questions about using EFT services.
A check is a piece of paper with 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. Thus, they ask:
-- What record--what evidence--will I have of my transactions?
-- How easily will I be able to correct errors?
-- What if someone steals money from my account?
-- What about solicitations?
-- 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?
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A cancelled check is permanent proof that a payment has been made. Is proof of payment available with EFT services?
The answer is yes. If you use an ATM to withdraw money or make deposits, or a point-of-sale terminal to pay for a purchase, you can get a written receipt--much like the 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 all electronic transfers to and from your account, including those made with debit cards, by a pre-authorized arrangement, or under a telephone transfer plan. It 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.
Your monthly statement is proof of payment to another person, your record for tax or other purposes, and your way of checking and reconciling EFT transactions with your bank balance.
How Easily Will I Be Able to Correct Errors?
The way to report errors is somewhat different with EFT services than it is with credit cards (see page 22 for correcting credit billing errors). But, as with credit cards, financial institutions must investigate and correct promptly any EFT errors 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. 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. (The time periods are longer for POS debit card transactions and for any EFT transaction initiated outside the United States.) In the meantime, you will have full use of the funds in question.
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 re-credit 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 re-credited during the investigation. You may ask for copies of documents relied on in the investigation.
What About Loss or Theft?
Establish AAA Credit In 30 DaysTo work this plan you need at least $400 to begin. You should borrow this from your friends if necessary. Then go to a bank of ..... 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 page 25). 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 the 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.
Example:
On Monday, john's debit card and secret code 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 a statement from the bank, 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).
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