FREQUENTLY ASKED CONSUMER LAW QUESTIONS AND ANSWERS

Your bank may be required to protect you and reimburse charges or withdrawals from your account IF: 

1. The account is for personal use (not commercial or business-related), 
2. The transaction in question was done electronically (not by paper check or wire transfer), and 
3. The transaction was NOT authorized by you. 

Under these circumstances, the consumer law known as the Electronic Fund Transfer Act (EFTA) provides certain rights depending on when you report the unauthorized transfer. You must act quickly to notify the bank and dispute each transaction. If you wait too long, you may receive less money back.

For more details about the EFTA, read our free Consumer’s Guide to the Electronic Funds Transfer Act and see how Waiting to Report Stolen Money Under the EFTA Can Cost You.

If your bank account is held for personal (not business) purposes and someone accessed your account electronically without your authority, you should be covered by the Electronic Fund Transfer Act (EFTA) and repayment is possible. The amount of your reimbursement will depend on how quickly you notify the bank. 

If the money was taken by wire transfer, the EFTA does not apply, and you are very often not protected if the bank can show it followed a commercially reasonable security protocol intended to protect you. However, if you notify the bank that your account was breached but more money is withdrawn because the bank does not secure your account, the bank may not be acting in a commercially reasonable manner, and you may be protected under other laws predating the EFTA.  

Keep in mind that consumers are typically unable to recover stolen money from the thieves that take it. Your best option is usually to request reimbursement from the bank if the law covers your situation. However, banks often ignore their obligations and refuse to reimburse you. When that happens, you will need an experienced consumer protection lawyer to bring legal action to enforce your rights.

It can be difficult for consumers who have been swindled out of money to hire a lawyer. To help level the playing field, most consumer protection laws allow fee-shifting. This means if you prevail against a financial institution, credit bureau, or other entity that violates that consumer law, the violator is responsible for paying your reasonable attorney’s fees and costs. 

Whether your case settles out of court or is resolved through a fully litigated trial, the lawyers are paid out of the recovery. 

At Schlanger Law Group, we often advance the costs needed to bring a lawsuit so many of our clients have no out-of-pocket costs while we pursue justice from the violators.

The requirements vary for each consumer law.

To bring a legal action under the Electronic Fund Transfer Act (EFTA), you must file your lawsuit within one year of the date of the violation in question. The date of the violation can vary depending on the situation, but in cases of identity theft, a violation usually occurs when the bank declines or rejects your dispute—NOT when the unauthorized transaction itself occurs. 

Lawsuits brought under the Fair Credit Billing Act (FCBA) also must typically be filed within one year of the date your written dispute was denied. The FCBA often involves situations where you discover a charge on your credit card statement that you don’t recognize and didn’t authorize.

With unauthorized credit card charges, the Truth in Lending Act may also apply. This Act also imposes a one-year window of opportunity to file a lawsuit if your dispute is denied.

**Important: Do not confuse these lawsuit filing dates (statutes of limitation) with the amount of time you have to dispute an unauthorized transfer from your bank account or unauthorized charge on your credit card statement. Each Act establishes certain timeframes for you to dispute a problem and limit your losses. 

In general, you want to dispute any unauthorized transactions as soon as possible and certainly within 60 days of when the charges appear in your statement.  

More specifically, the EFTA has a complicated structure that increases your potential losses the longer you wait to notify the financial entity about the unauthorized transaction. You can dispute verbally or in writing, but we recommend you do both—call immediately and follow up in writing with supporting documents if possible. Keep copies of everything you send. (To read a full explanation of the EFTA and see the notification structure in chart form, click here) 

However, the FCBA requires consumers to send written notification of any disputed charges to the billing dispute address provided by the credit card company in its monthly billing statements. Due to improved technology, a credit card company may now allow emailed or texted disputes in place of mailing a written dispute to the dispute address. Although this might be considered an effective way to dispute a charge, we recommend sending a written notice, by certified mail, and keeping copies of all correspondence to protect your rights. 

Under the FCBA, you must generally dispute credit card transactions within 60 days of the date on the statement where the unauthorized charge first appeared. Find more details about disputing credit card charges in this article.

According to the Fair Credit Reporting Act (FCRA), two timeframes establish your window of opportunity to bring a lawsuit:

2 years from the date you discovered the credit reporting violation

OR

5 years from the date the violation occurred. 

Whichever is earlier. 

So, the important question is, what is considered a violation under this consumer law? In cases involving a credit reporting agency’s sloppy investigation of an incorrect account on your credit report, the clock does not start ticking when you find a credit report error. You must dispute the error with the credit reporting agency (CRA) that issued the report. Then, the CRA has 30 days to investigate the disputed information. 

If the CRA doesn’t reasonably investigate, takes longer than 30 days, or doesn’t report its findings within five days of completing the investigation, an FCRA violation occurs. A violation can also occur if the source of the incorrect information doesn’t properly investigate your dispute, or if the CRA rejects your dispute without legal basis.

**Important: many courts have held that a new violation occurs if you re-dispute a credit report entry and your dispute is rejected again, or if inaccurate information was corrected but then reported again. These “new violations” would restart the two-year filing deadline mentioned above.

Click on this link for an in-depth explanation of the FCRA Statute of Limitations.

Notify your financial institution in writing as quickly as possible. Include any documents that support your claim that the money was stolen. Send valuable information such as a police report or proof that you were in one place while the disputed transaction occurred somewhere else to clarify all facts surrounding the transaction.

In our experience, it is better not to use the online dispute portals for your dispute. You may not be able to attach documents, your explanation may be limited to a certain number of characters, your options may be limited by drop-down menus, and you may not be able to keep a copy for future reference. Incomplete information can give the bank an excuse to reject your dispute.

Debt collection falls under the consumer law known as the Fair Debt Collection Practices Act. This act prohibits debt collectors from using deception, unfair tactics, harassment, threats, or abusive conduct to collect money owed. If you don’t owe the debt, you need to dispute it.

Write to the debt collector to request verification of the debt and copies of any documents that show you owe the debt. Be sure to send your dispute in writing along with any supporting documents. The debt collector’s dispute investigation will depend on the information you provide. 

Details are important! If you supply complete information, your dispute will carry more weight than the thousands of consumers who dispute a debt without any supporting proof. If you offer few details, the debt collector will have an easier time justifying a very limited “investigation.” 

For example, don’t just dispute the balance owed… explain that you  dispute the balance because you already paid the debt in full and send a copy of the cashed check. 

Do not lie or misstate the facts.  

When you send a high-quality dispute with substantiating information and proof of why the debt is not yours, you are more likely to resolve the matter directly with the debt collector. If your dispute is still rejected, and you need to file a lawsuit, your strong dispute letter and real efforts to try to resolve the matter before resorting to litigation can be extremely helpful in maximizing your recovery.

There are two key federal consumer laws that apply to this sort of dispute.

First, the Fair Credit Billing Act (FCBA) applies to credit card situations. Under the FCBA you must dispute the charge by sending a written notice to the credit card company at the billing dispute address listed on your monthly statement. You must dispute in writing within 60 days of the date on the statement that included the unauthorized charge. The FCBA focuses on whether the credit card company’s investigation was reasonable.

**Consumer Tip: If you are receiving credit card statements for a card you never applied for, you may be a victim of identity theft. Fortunately, you are still covered by the FCBA even though you never requested the account.

Second, under Section 1643 of the Truth in Lending Act (TILA), the issue is no longer whether the credit card company did a reasonable investigation. Instead, this consumer law looks at whether the charge in question was authorized by you, the card holder. If the charge is more than $50 and you did not authorize it, you are not liable for the charge regardless of the credit card company’s investigation.

If your situation is covered by the consumer law known as the Electronic Fund Transfer Act AND you act quickly… yes, your losses may be limited. You may be liable for $0, $50, $500, or an unlimited amount depending on when you notify your bank. The unlimited liability scenario only applies to money lost after the first transaction, not the first loss itself. This is because banks usually argue they would have stopped the later transactions if you had let them know.

Basically, the longer you wait to notify the financial institutions affected by your identity theft, the more you could lose. The key is to notify everyone involved as soon as possible. While there are some exceptions to these requirements, you never want to count on being an exception.

If your identity theft involves credit cards, a different consumer law may be involved. With credit card ID theft, the Fair Credit Billing Act and/or the Truth in Lending Act provide complete protection regardless of the amount involved. If you are eligible for reimbursement under these laws, you should receive a full refund if you dispute promptly.

Delinquent debt, unpaid bills, bankruptcy, foreclosure actions and other negative information will lower your credit score.  If you have established a good credit history, but errors suddenly appear in your credit report, these false reports will affect your credit score and can create serious financial difficulties.

If left uncorrected, errors in your credit report can lead to: 

• Mortgage, auto loan, and line of credit rejections,
• Credit card application denials or increased interest rates in your current accounts,
• Denial of rental applications,
• Security deposit requirements for utilities, 
• Undesirable terms in credit opportunities including exorbitant interest rates, higher monthly payments, shorter loan terms, and
• Other costly issues that can add up to thousands of dollars over time.

Whether the false information in your credit report resulted from a clerical error or an unscrupulous creditor trying to collect more money than it deserves, these errors can cause extensive damage to your credit history and your wallet. 

You should dispute any errors in your credit report quickly to minimize the potential damage and losses you may incur. To learn more about disputing a credit report error and the consumer law involved, be sure to read the next section.

Many consumers make the mistake of first disputing a credit report error with the creditor that reported the erroneous information. While notifying the creditor won’t hurt you (and is required under the Fair Credit Billing Act mentioned above if you are disputing unauthorized charges or other types of billing errors), your first step should be to dispute the error with the credit reporting agency (CRA) that created the report.

Once you notify the credit reporting agency about the error, the Fair Credit Reporting Act (FCRA) comes into play. Under this consumer law, the credit reporting agency is obligated to notify the creditor that you have disputed their information, investigate your dispute, and respond to your dispute within a certain timeframe. 

Always send a detailed written dispute to the CRA by certified mail and include any documentation that supports your claim that the credit report contains an error. Keep copies for yourself and send a copy to the creditor as well. 

** Important Tip: Credit repair organizations may offer to resolve the reporting error for you. However, if the dispute comes from an organization instead of directly from you, the CRA can argue that you didn’t file a dispute under the FCRA, so the Act does not apply, and they have no obligation to investigate or correct the error.

If you have provided a detailed dispute with supporting information but the CRA doesn’t properly investigate or unreasonably denies your dispute, you may have the grounds for a lawsuit to recover the damages caused by the error.  Although the FCRA does not specifically force the credit bureaus to fix the error, fixing the error is usually possible as a part of settlement.

This is a common scam where a fraudster pretends to hire you and sends a check to pay for new equipment or some other related expense “to get you started.” When you deposit the check, you receive a provisional credit in your account so you might think the money is there. 

The scammer then asks you to quickly use the money to buy the equipment from a fake vendor who is actually part of the fraud. Once the payment is made, you learn the check was fraudulent, it never cleared your bank, and your fake employer disappears.

Unfortunately, in these cases, current consumer law usually doesn’t help. Your chances of getting your money back are limited. Most bank account holder agreements state that if you spend deposited funds before they fully clear the transfer process, you do so at your own risk. It is always best to wait until the provisional credit becomes a final credit before counting on that money.

Moreover, legitimate employers will not require new hires to pay for office expenses through their personal accounts.  This is a red flag that your new “job” may really be a scam.