You have 60 days from the date a periodic statement containing a problem or error was sent to you to notify your financial institution. The best way to protect yourself if an error occurs — including erroneous charges or withdrawals from an account, or for a lost or stolen ATM or debit card — is to notify the financial institution by certified letter, return receipt requested, so you can prove that the institution received your letter. Keep a copy of the letter for your records.
If you fail to notify the institution of the error within 60 days, you may have little recourse. Under federal law, the institution has no obligation to conduct an investigation if you’ve missed the 60-day deadline.
Once you’ve notified the financial institution about an error on your statement, it has 10 business days to investigate. The institution must tell you the results of its investigation within three business days after completing it and must correct an error within one business day after determining that the error has occurred. If the institution needs more time, it usually may take up
to 45 days, in most situations, to complete the investigation — but only if the money in dispute is returned to your account and you’re notified promptly of the credit. At the end of the investigation, if no error has been found, the institution may take the money back if it sends you a written explanation.
An error also may occur in connection with a point-of-sale purchase with a debit card. For example, an oil company might give you a debit card that lets you pay for gas purchases directly from your bank account. Or you may have a debit card that can be used for various types of retail purchases. These purchases will appear on your periodic statement from the bank. In case of an
error on your account, however, you should contact the card issuer (for example, an oil company or a bank) at the address or phone number provided by the company. Once you’ve notified the company about the error, it has 10 business days to investigate and tell you the results. In this situation, it may take up to 90 days to complete an investigation, if the money in dispute is
returned to your account and you’re notified promptly of the credit. If no error is found at the end of the investigation, the institution may take back the money if it sends you a written explanation.
Lost or Stolen ATM or Debit Cards
If your credit card is lost or stolen, you can’t lose more than $50. If someone uses your ATM or debit card without your permission, you can lose much more.
If you report an ATM or debit card missing to the card issuer before it’s used without your permission, you can’t be held responsible for any unauthorized withdrawals.
If unauthorized use occurs before you report it, the amount you can be held responsible for depends upon how quickly you report the loss to the card issuer.
- If you report the loss within two business days after you realize your card is missing, you won’t be responsible for more than $50 for unauthorized use.
- If you fail to report the loss within two business days after you realize the card is missing, but do report its loss within 60 days after your statement is mailed to you, you could lose as much as $500 because of an unauthorized transfer.
- If you fail to report an unauthorized transfer within 60 days after your statement is mailed to you, you risk unlimited loss. That means you could lose all the money in your account and the unused portion of your maximum line of credit established for overdrafts.
If you failed to notify the institution within the time periods allowed because of an extenuating circumstance, such as lengthy travel or illness, the issuer must reasonably extend the notification period. In addition, if state law or your contract imposes lower liability limits, those lower limits apply instead of the limits in the federal EFT Act.
Once you report the loss or theft of your ATM or debit card, you’re no longer responsible for additional unauthorized transfers occurring after that time. Because these unauthorized transfers may appear on your statements, however, you should carefully review each statement you receive after you’ve reported the loss or theft. If the statement shows transfers that you did not make or that you need more information about, contact the institution immediately, using the special procedures provided for reporting errors.
Limited Stop-Payment Privileges
When you use an electronic fund transfer, the EFT Act does not give you the right to stop payment. If your purchase is defective or your order is not delivered, it’s as if you paid cash. That is, it’s up to you to resolve the problem with the seller and get your money back.
There is one situation, however, when you can stop payment. If you’ve arranged for regular payments out of your account to third parties, such as insurance companies, you can stop payment if you notify your institution at least three business days before the scheduled transfer. The notice may be oral or written, but the institution may require a written follow-up within 14 days of the oral notice. If you fail to provide the written follow-up, the institution’s responsibility to stop payment ends.
Although federal law provides only limited rights to stop payment, individual financial
institutions may offer more rights or state laws may require them. If this feature is important to you, you may want to shop around to be sure you’re getting the best “stop-payment” terms available.
The EFT Act protects your right of choice in two specific situations regarding use of electronic fund transfers: First, the Act prohibits financial institutions from requiring you to repay a loan by electronic transfer. Second, if you’re required to receive your salary or government benefit check by EFT, you have the right to choose your institution.
If you decide to use EFT, keep these tips in mind:
- Take care of your ATM or debit card. Know where it is at all times; if you lose it, report it as soon as possible.
- Choose a PIN for your ATM or debit card that’s different from your address, telephone number, Social Security number, or birthdate. This will make it more difficult for a thief to use your card.
- Keep and compare your receipts for all types of EFT transactions with your periodic statements. That way, you can find errors or unauthorized transfers and report them.
- Make sure you know and trust a merchant or other company before you share any bank account information or pre-authorize debits to your account. Be aware that some merchants or companies may use electronic processing of your check information when you provide a check for payment.
- Review your monthly statements promptly and carefully. Contact your bank or other financial institution immediately if you find unauthorized transactions and errors.