The EFT Act recognizes their right to nominate the financial institution to which such payments are to be made. The EFT Act also prohibits a creditor or lender from requiring a consumer to repay a loan or other credit by electronic fund transfer, except when there is an overdraft on checking plans.
The financial institution must give the customer notice of their liability in case the card is lost or stolen. This must include a phone number for reporting the loss and a description of its error resolution process.
Limit to customer liability on loss or theft of card
If a customer reports to the financial institution that their card is missing before any transactions takes place, they are not held responsible for any transaction that takes place after the report of a missing/stolen card. A customer can be liable for unauthorized withdrawals if their card is lost or stolen and they do not follow certain criteria:
Loss is limited to $50 if institution is notified within two business days
Loss could be up to $500 if institution is notified between 3 and 59 days
If loss is not reported within 60 business days customer risks unlimited loss on transfers made after the 60-day period – could lose all money in account plus maximum over draft if any
EFT errors
EFT is not a perfect system; therefore customers should still be diligent in reviewing their EFT statements for possible errors as they would with any other type of transaction. Should a customer notice that there has been an error in an electronic fund transfer relating to their account certain steps must be taken: Under the Act, the customer must:
Write or call the financial institution immediately if possible
Must be no later than 60 days from the date of erroneous statement
Explain why they believe there is an error, the type, dollar amount and date
May be required to send details of the error in writing within 10 business days
Under the Act, the financial institution must:
Promptly investigate the error and resolve it within 45 days
Errors involving new accounts, POS transactions, and foreign transactions may take up to 90 days
If it takes more than 10 business days to complete the investigation:
*Must recredit the amount in question
For new accounts may take up to 20 business days to recredit the account
Must notify customer of the results of investigation:
*If there was error – correct it or make recredit final
*If no error – explanation in writing, notify customer of deducted recredit
Customer has the right to ask for copies of any documents relied on in the investigation
What the EFT Act Covers
The EFT Act does not apply to all preauthorized plans. The EFT Act does not apply to automatic transfers from any account held in the name of the institution the consumer uses to the account the consumer uses.
*An example of this would be where the EFT Act would not apply to any automatic payments put towards a mortgage held by the financial institution where a consumer would hold their electronic funds account.
The EFT Act would also not apply to automatic transfers among a consumer's account at a specific financial institution.
The EFT Act also does not cover all transfers. Some banks, other financial institutions, and vendors will produce cards with a cash value imprinted into the card itself
When using electronic funds transfer, the Act does not give the consumer the right to stop payment.
State law or any contract that imposes a lower liability limit than those mentioned in the “Loss or Theft: Customer Liability” will be preempted by the federal EFT Act unless the state law provides protections that are greater than that provided under Federal law..
