Electronic Funds Transfer Act Attorney

Photo of a person using a debit card at an ATM depicting a situation where a consumer may need an electronic funds transfer act attorney to correct transaction errors.

Like many people, you probably use debit cards to buy groceries or gas. When you need cash, you may stop at an ATM. Have you relied on a mobile person-to-person app to pay your friend for your share of lunch? Is it just easier to pay your bills online? 

Most people appreciate the convenience of electronic transfers and debit card transactions. But this technology comes with some risks. Did you know that the Electronic Funds Transfer Act applies to these situations? When you discover unauthorized electronic financial activity, turn to an Electronic Funds Transfer Act attorney for help.

Electronic Fund Transfers are Growing in Popularity

2021 Business Insider study revealed that 65% of Americans use mobile banking. And almost 80% of people prefer electronic banking instead of physically going to a bank. Another survey from Ipsos-Forbes found that 76% of US adults use their bank’s mobile app. Also, a whopping 97% of Millennials regularly used mobile banking in 2021.   

In response to the increase in electronic transfers, Congress enacted the Electronic Fund Transfer Act (EFTA) and Regulation E in 1978. This law protects consumers from unauthorized and fraudulent electronic transfers. Unfortunately, if you use electronic fund transfers, you may face unauthorized activity. The team of Electronic Fund Transfer Act attorneys at Schlanger Law Group is here to help if you are facing one of these situations.

Situations Covered by the Electronic Funds Transfer Act

Before 1978, financial transaction laws only protected banks’ rights and obligations. Financial institutions had no liability for unauthorized transactions. Consumers had nowhere to turn when their money disappeared from their accounts without authority.   As cybercrime and identity theft grew, consumers needed protection. 

Congress created the Electronic Fund Transfer Act (EFTA) to protect electronic banking consumers. The Consumer Fraud Protection Bureau enforces the law following Regulation E. This set of rules explains the EFTA, including which situations and entities are covered and may be held liable. 

The EFTA Covers Certain Transfers

The EFTA only applies to specific electronic fund transfer (EFT) situations. The transfer must: 

  • Involve an individual account, 
  • Be unauthorized, and 
  • Be electronic.

First, the EFTA only covers individual accounts. The account must exist for family, household, or personal purposes only. The EFTA does not cover commercial and business accounts.   

Next, “unauthorized” EFTs have three elements: 

  1. The transfer must be made by someone other than the account holder, 
  2. The person who makes the transfer does not have the authority to transfer money, and 
  3. The account holder receives no benefit from the transaction.

You may voluntarily share your PIN or give your ATM card to a trusted person so they can transfer your money. Those transfers are not considered “unauthorized” because you allowed the action. Under those circumstances, the EFTA does not apply. 

Consumer TIP: If your trusted relationship ends and you don’t want that person to have access to your account, tell your bank that you are withdrawing that person’s authority. You should also change your PIN or other access devices to protect against future unauthorized transfers.   

Last, the transfer must be an Electronic Fund Transfer (EFT). The EFTA covers online banking transfers, bill-pay, mobile banking, payment apps, and other strictly electronic forms of moving money. The Electronic Funds Transfer Act does not protect all banking transactions. 

The EFTA Does NOT Cover These Transfers 

Not all banking transfers are covered by the EFTA. Transactions that do not fall under the act include: 

  • Payment by check, mainly because paper checks provide tangible proof of payment, and the EFTA doesn’t need to protect consumers using traditional checks,
  • Transfers between two businesses or two banks (including wire transfers),
  • Gift cards, prepaid phone cards, and credit card transactions,
  • Transfers to buy commodities or securities, and 
  • Transfers within the same bank if authorized by the account holder. 

How the Electronic Funds Transfer Act Protects Consumers 

Before the EFTA, a consumer had no civil rights if someone took money from their account without authority. Even if the account holder was a victim of fraud or identity theft, they had no right to error resolution or reimbursement. Under the EFTA, consumers now have legal remedies, including repayment of the transferred funds.  

If you discover an unauthorized transfer in your personal account and act quickly, you can limit your potential losses. Generally, the sooner you notify your bank about unauthorized transactions, the more protection you will receive.   

Basic EFTA Error Resolution Provisions and Protections

The Two-Business Day Rule

The law is complicated, but if you report a transfer within two business days of discovering a problem, your maximum liability is limited to $50. For example, if you realize your debit cards are missing, you should tell your bank immediately. If you notify your bank within two business days of discovering the card is gone, you should lose no more than $50. 

Also, contact your bank immediately if you find unauthorized transfers in your monthly bank statement. If you notify the bank about the unfamiliar transactions within two business days, your losses should be limited to $50.

The 60-Day Rule

If you find an unauthorized transfer in your bank statement but miss the two-day window, all is not lost. If you report the problem within 60 days from the date your bank sent the statement, your potential liability is capped at $500. Keep in mind that your bank cannot stop unauthorized transfers if it doesn’t know there is a problem. Again, the sooner you notify your bank, the sooner it can protect your funds.

After 60 Days

Beyond 60 days, you may lose a substantial amount of money depending on your circumstances. In some cases, potential losses may be unlimited and even exceed the amount of money in your account. For example, if you have overdraft protection on your checking account, an identity thief could withdraw more than your current balance, leading to an overdrawn account. If your bank covers the additional funds, you may face overdraft fees on top of losing more than your account balance. 

For a more detailed explanation of how the EFTA works, see A Consumer’s Guide to the Electronic Funds Transfer Act. This valuable article provides detailed information, a simple chart to explain the different timeframes and liability potentials, and examples of how you can reduce your losses. 

How Can Consumer Protection Attorneys Help? 

Lawyers and firms that focus on Electronic Funds Transfer Act and Regulation E cases better understand the legal intricacies involved. The experienced EFTA attorneys at Schlanger Law Group know how to protect consumers facing these complex situations. 

For example, we can explain: 

  • Whether your situation qualifies for protection under the EFTA,
  • How to properly notify your bank about an unauthorized electronic fund transfer, 
  • What the financial institution must do when it learns about unauthorized transfers, and
  • What to expect when you take the necessary steps under the law.

Because every situation is different, you deserve an attorney who will listen to your story, create a solid legal strategy to protect your rights, help recover your stolen money, and ensure financial institutions are held liable under the law.  

What You Can Do to Protect Yourself First

Consumers have certain liabilities and responsibilities to monitor their financial accounts. Immediately upon discovering an unauthorized transaction, even before contacting a lawyer, you should notify your financial institution. Follow these steps to create a paper trail that will help your attorney enforce your rights if you need help:

  1. Put your notice in writing,  
  2. Include any supporting documents that show the transfer was not authorized, 
  3. Mail your notice by certified mail and request a return receipt, and 
  4. Keep copies of everything. 

Once the bank receives your notification, it must:  

  • Perform an investigation into the circumstances surrounding the transfer(s) in question, 
  • Reporting its investigation findings to you within a specific timeframe, 
  • Correct any errors, and 
  • Refund your money as required by the EFTA.

If the bank cannot complete its investigation within the time allowed by the EFTA, you should receive a “provisional credit” of the amount taken from your account. You can use this money until the bank completes its investigation. The EFTA also provides other consumer remedies that vary depending on your circumstances. 

Remedies Available Under the EFTA

If your bank does not comply with the EFTA requirements, you have the right to request compensation, also known as legal damages. Possible consumer damages under the EFTA include: 

  • Actual damages. These are related to out-of-pocket losses, emotional distress, and lost wages. You may also request a refund of bank fees or overdraft charges incurred because your account was overdrawn. You also might be entitled to further compensation if your credit history is damaged.
  • Statutory damages. These can range from $100 to $1,000. 
  • Treble damages. This amount is calculated at three times your actual damages. Treble damages punish financial institutions if they violate the EFTA by:  
  • Not limiting your losses after receiving notice of a problem,  
  • Failing to provide a provisional credit and failing to complete its investigation in a timely fashion,  
  • Rejecting your dispute without a reasonable basis, or 
  • Other triggering factors. 
  • Attorney’s fees and costs. To help level the playing field, a bank must pay the consumer’s attorney’s fees and costs if it violates the EFTA. At Schlanger Law Group, we accept many EFTA cases on a contingency basis and request payment of our attorney’s fees and costs from the bank. 
  • Class action remedies. These cases involve several consumers bringing legal action against a bank to protect all account holders mistreated by the same bank. The group, known as a class, can request the same remedies above, including attorney’s fees and costs. However, the statutory damages are limited to $500,000 or one percent of the bank’s net worth, whichever is less. 

When You Need a Dedicated and Tenacious Electronic Funds Transfer Act Attorney, Turn to Schlanger Law Group 

Our team of seasoned consumer protection lawyers is ready to fight for your rights under the Electronic Funds Transfer Act and Regulation E when your bank or financial institution has violated the law. Enforcing the EFTA is one of our core practice areas. We have the resources and knowledge necessary to help recover your hard-earned money and repair your credit. 

If you find an unauthorized electronic transfer, there’s no time to waste. Contact your bank, file a dispute, and if your situation is not resolved quickly, Schlanger Law Group may be able to help. Call (212) 500-6114 or click the button below to complete a simple contact form.

Schlanger Law Group LLP serves clients in New Jersey, New York, and throughout the United States with consumer protection, class action, credit reporting, and identity theft issues.