Practice Areas Consumer Protection Debit Card and Electronic Transfer Fraud

Overview

Too many people experience fraud on their bank accounts. This can happen when you lose a debit card, a pre-paid debit card, or someone gains access to your phone and applications such as Zelle, Cash App, PayPal, Venmo, and other person-to-person (“P2P”) payment transfer services. If you have had money stolen from your account by someone using your debit card to make unauthorized withdrawals at an ATM or unauthorized purchases, or transfer money out of your account using a P2P service, and your bank refuses to reimburse you for those fraudulent transactions, you may be able to recover your money under the Electronic Funds Transfer Act (EFTA).

Table of Contents

Too many people experience fraud on their bank accounts. This can happen when you lose a debit card, a pre-paid debit card, or someone gains access to your phone and applications such as Zelle, Cash App, PayPal, Venmo, and other person-to-person (“P2P”) payment transfer services. If you have had money stolen from your account by someone using your debit card to make unauthorized withdrawals at an ATM or unauthorized purchases, or transfer money out of your account using a P2P service, and your bank refuses to reimburse you for those fraudulent transactions, you may be able to recover your money under the Electronic Funds Transfer Act (EFTA). Contact us for a free consultation.

What is the Electronic Fund Transfer Act (EFTA)?

The EFTA is a federal law that was enacted in 1978 to protect consumers who engage in electronic financial transactions. The main purpose of the EFTA is to protect consumers from unauthorized transactions and to ensure that they are informed about the terms and conditions of their electronic transactions. At its core, the EFTA requires banks and other companies to obtain your approval before debiting or crediting your account. When approval is not obtained, consumers may be entitled to compensation. The EFTA applies to unauthorized transactions on debit cards, ATMs, prepaid debit cards, ACH transfers, and P2P transactions on applications such as Venmo, Cash App, and Zelle.

Key Provisions of the EFTA

The EFTA contains several requirements for banks and financial account providers aimed at safeguarding consumers:

Disclosure Requirements: Financial institutions must provide consumers with clear and detailed information about the terms and conditions of electronic funds transfer services. This includes information about fees, the consumer’s rights and responsibilities, and how to report unauthorized transactions.

Unauthorized Transactions: Consumers are protected against unauthorized transactions if they report them in a timely manner. Liability is limited to $50 if the consumer reports unauthorized transactions within two business days. Liability is limited to $500 if the consumer reports unauthorized transactions after two business days but within 60 days. Banks and other financial institutions must reimburse any monies above $50 or $500 that were fraudulently stolen from a consumer’s account.

Error Resolution: If there is a discrepancy in the consumer’s account, such as an incorrect amount debited or a transaction not authorized by the consumer, the financial institution must investigate and resolve the error within 10 business days.

Preauthorized Transfers: The act requires that preauthorized electronic fund transfers, such as recurring payments, must be authorized by the consumer in writing. Additionally, consumers have the right to stop payment on these transfers if they notify their financial institution at least three business days before the scheduled date of the transfer.

Electronic Transfer Fraud: Recognizing the Signs

Electronic transfer fraud occurs when an unauthorized person gains access to your bank account through electronic means and conducts transactions without your permission. This can happen through various methods, such as:

  • Debit Card Fraud: Maybe you lost your card, it was stolen, or somehow a criminal got access to the debit card information. When you see transactions that you do not recognize and did not authorize on your account after your debit card information gets out, that is debit card fraud.
  • P2P Fraud: If someone gains access to your Zelle, PayPal, Cash App, Venmo or other P2P account they can make unauthorized transfers out of your account. Review your bank statements or P2P account for transactions that you do not recognize to identify P2P fraud.
  • ACH Fraud: Unauthorized Automated Clearing House (ACH) transfers can occur when your account information is misused.

How the EFTA Protects Against Fraud

The EFTA provides several layers of protection to consumers facing fraudulent transactions:

  • Limited Consumer Liability: If you report an unauthorized transaction within two business days, your bank or financial institution must limit your liability to $50. If you report it between two and 60 days, your liability may increase to $500. That means your bank or financial institution should reimburse you for any amounts above $50 or $500 that were transferred out of your account without your permission
  • Error Resolution Process: After you notify your bank or other financial institutions of unauthorized transactions, they are required to investigate and resolve disputes within a specific timeframe, usually 10 business days, ensuring a quick response to any reported issues.
  • Consumer Notification: Banks must notify consumers of any changes to the terms of their EFT agreements, including changes in fees or rights.

Legal Recourse for EFTA Violations

If you are a victim of financial fraud and your bank refuses to reimburse the fraudulent transactions, you have the right to seek legal recourse. The EFTA allows consumers to file a lawsuit against financial institutions that fail to comply with the law. You can recover actual damages, statutory damages up to $1,000, and attorney fees. In cases where a financial institution engages in a pattern or practice of noncompliance, additional damages may be awarded.

Why Choose Berger Montague for EFTA Fraud Cases?

At Berger Montague, we specialize in representing clients who have been victims of EFTA violations. Our experienced attorneys are well-versed in consumer protection laws and are dedicated to ensuring that your rights are upheld. We provide personalized legal services, from investigating unauthorized transactions to filing lawsuits against non-compliant financial institutions.

FAQs About EFTA Fraud

  1. What should I do if I notice an unauthorized transaction on my financial account?
     Immediately report the transaction to your bank or financial institution. Quick reporting can limit your liability and expedite the resolution process.
  2. How can I prevent financial fraud?
     If you lose your debit card or believe that the debit card information has been compromised in any way, contact your bank to terminate the card and get a replacement mailed to you. Similarly, if you lose your phone, use a computer to visit the P2P companies you use (like Venmo or Cash App) and let them know the situation. You can also monitor your bank statements regularly, avoid sharing your PIN or account information, and use secure methods for online transactions.
  3. How long do I have to report an unauthorized transaction?
     You should report unauthorized transactions as soon as possible, and its best if you do so within two business days of any fraudulent transactions. However, you have up to 60 days from the statement date to limit your liability.
  4. What if my bank or financial institution refuses to investigate my complaint?
     Banks and financial institutions are required to investigate unauthorized transactions reported by the consumer and resolve them in a timely manner. If your bank does not comply with the EFTA’s requirements, you may have the right to file a lawsuit to recover damages.
  5. What if my bank or financial institution refuses to reimburse me for fraudulent transactions on my account?
     Banks and financial institutions are required to reimburse consumers for financial fraud above $50 if the unauthorized transactions are reported within two business days, and above $500 if the unauthorized transactions are reported within 60 days of the statement date. If your bank or financial institution investigates the transactions and still refuses to reimburse you, you may be able to recover the stolen monies in Court. Contact us today for a free consultation.
  6. Can I stop a preauthorized payment?
     Yes, you have the right to stop a preauthorized payment by notifying your bank at least three business days before the scheduled transaction.
  7. What damages can I recover in an EFTA lawsuit?
     You can recover actual damages, statutory damages up to $1,000, and attorney fees. In some cases, additional damages may be awarded for noncompliance.
  8. Is there a time limit for filing an EFTA lawsuit?
     Yes, you generally have one year from the date of the violation to file a lawsuit.
  9. How are consumers protected under the EFTA Act? The EFTA limits consumer liability for unauthorized transactions, requires banks to investigate errors promptly, and mandates clear disclosures about fees and terms. It also allows consumers to stop preauthorized payments and provides the right to sue for damages if the bank fails to comply.

Contact Berger Montague for EFTA Fraud Assistance

If you have experienced unauthorized transactions or believe your bank has violated the EFTA, contact Berger Montague today. Our attorneys are here to help you navigate your rights under the EFTA and to ensure that you receive the compensation and protection you deserve.

Debit Card and Electronic Transfer Fraud FAQs

What’s involved with fixing the deceased indicator?

We start with a free, initial consultation to learn about your deceased credit report and how it has affected you. We will gather all the relevant documentation and work with the credit bureaus, your creditors, and anyone else necessary to get your credit report fixed. We will keep you informed at each step along the way.

What’s the value of my case?

Being misreported as dead has such a devastating impact on consumers’ finances. These cases can be resolved for significant amounts, especially if you have been denied a mortgage, loan, job, apartment, or other benefits as a result of being reported as dead by one of the Big 3 bureaus—Experian, Equifax, and TransUnion. We have resolved numerous cases involving deceased credit reports.

What is a deceased indicator?

A deceased indicator is how the Big 3 credit bureaus refer to the notation on your credit report that you are deceased/dead. Some of the credit bureaus also have a Fraud Alert (also called IDVision or Identity Scan depending on the bureau) that will appear on your credit report.

Why are only one of the major bureaus (Experian, Equifax, TransUnion) reporting me as deceased, while the others are saying I am alive?

There are many ways this can happen. The different credit reporting agencies have different procedures for obtaining and matching data, so one may match you with someone reported as dead to the Social Security Administration, but the others may not. Not all lenders and creditors report to all bureaus either, so if a creditor is falsely reporting you as deceased, that creditor may report to only one bureau and not the others.

What is the “X” in the account status?

A deceased indicator can also appear as an “X” in the “account status” field on a tradeline sent from a creditor to the credit bureau. Depending on what version of your report you are viewing—one provided to you by the bureaus or one provided by the bureaus or a reseller to an end-user, your report might have an “X” on it, or it might say “deceased” or something similar. Our experienced attorneys can help you gather all the relevant documents and sort out who is reporting what so the problem can be solved once and for all.

Is someone stealing my identity and reporting me as dead?

It is possible. Many false reports that a consumer is deceased result from errors by the bureaus and creditors, but occasionally the error is the result of someone trying to fraudulently claim social security benefits.

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