Most of us take for granted the computer technology that enables banks to offer a variety of automated services, known as the electronic funds transfer (EFT) system. Whenever you use an ATM or arrange for direct deposits into your account, you are tapping into the EFT system. This system offers us convenience and quick access to our money, but when errors occur, they can wreak instant havoc.
When you bank electronically, be careful about monitoring your accounts. Errors can be hard to prove and could have serious consequences. Your best defense is to keep accurate records of your EFT transactions and to reconcile your statement as soon as you receive it (very important in order to limit your liability). If you find an error, quick action improves your chances of correcting it without loss.
The Electronic Funds Transfer Act (EFTA) sets up the procedures for resolving errors and affords you a lot of protection. This act provides that if you report a lost or stolen ATM card within two business days after discovering the loss, your liability for unauthorized transactions is limited to $50. If you report it between two and 60 days, and the bank can prove it could have stopped the unauthorized transactions had you informed it earlier, your liability could increase to $500.
If you notice an error on your bank statement or on an ATM receipt, you are required to notify the bank within 60 days. If you do not report unauthorized transactions within 60 days after the statement was mailed, you can be completely liable for the amount withdrawn. If the bank asks you to put your complaint in writing (most will require this) and you do not, the bank does not have to re-credit your account.
If the bank fails to complete its investigation of your written error within 10 business days, it must by law re- credit your account for the disputed amount. The bank is required to notify you in writing of the results of its investigation of the error.
If any unauthorized transactions are made with an ATM card that you never received, you are not liable and the bank must cover the loss. Even if you lose your ATM card and have your pin number written on it (not a good idea) your liability is limited to $50 if you report it within two business days after discovering the loss.
Credit cards are covered under the Fair Credit Billing Act. This law allows you to withhold payment on a disputed charge and to ask your card issuer to investigate and resolve the matter for you. Card companies cannot try to collect while the dispute is being looked into. If your card is used illegally, the loss to you is usually the time it take to clear up the fraudulent charges rather than any money.
Your liability is strictly limited by law. It is important to report any lost card quickly. If you report the loss or theft of your card before it is used, you have no liability for any charges. It is a good idea to make a list of your credit cards numbers, expiration dates, and the phone number of each card issuer, and put it when you can easily get it if needed. If you report the loss of a card after it has been used, you must pay the first $50 fraudulent charged on each card. If your lost or stolen card is used for a mail-order purchase and has not been presented directly to the merchant, you are not liable for any amount, whether or not you have reported the loss of the card.
The Truth in Lending Act outlines your rights when disputing charges you have made on your credit card, such as defective merchandise. The law is complex, and if needed, you should ask your credit card company for a copy of your rights under this law. Sign new cards as soon as they arrive. Cut up expired cards and thrown them away. If you want to cancel a card, cut it up and return it to the issuer.
Note: Tim Kuhler has a background in both banking and consulting to the banking industry. He has been a full timer, and is a long time contributor to RVers Online