Consumer Protection -- Electronic Funds Transfer Act

The 1978 Electronic Funds Transfer Act is the governing statute while the Federal Reserve Board's Regulation "E" provides guidelines on electronic funds transfer card liability. The regulations require that:

·         a valid EFT card can be sent only to a consumer who requests it.

·         unsolicited cards can be issued only if the card cannot be used until validated.

·         the financial institution must inform you of your rights and responsibilities under the law in a written Disclosure Statement, including the procedure to correct errors in your periodic statements.

·         the user is entitled to a written receipt when making deposits or withdrawals from an ATM or using a point-of-sale terminal to make a purchase. The receipt must show the amount, date and type of transfer.

·         periodic statements must confirm the amount of all transfers, the dates and types of transfers, type of accounts to or from which funds were transferred, and the address and phone number to be used for inquiries regarding the statement.

Problems and Errors. You have 60 days from the date a problem or error appears on your written terminal receipt or on your periodic statement to notify your financial institution. If you fail to notify the financial institution of the error within 60 days, you may have little recourse. Under federal law, the financial institution has no obligation to conduct an investigation if you have missed the 60-day deadline.

Lost cards. If you report an ATM or EFT card missing before it is used without your permission, the card issuer cannot hold you responsible for any unauthorized withdrawals. If unauthorized use occurs before you report it, the amount you can be held responsible for depends upon how quickly you report the loss.

If you report the loss within two business days after you realize the card is missing but you do report its loss within 60 days after your statement is mailed to you, you could lose a much as $500 because of an unauthorized withdrawal.

If you do not report an unauthorized withdrawal within 60 days after your statement is mailed, you risk losing all the money in your account plus the unused portion of your maximum line of credit established for overdrafts.