Continuing my discussion of the importance of your credit report , the focus of today’s blog is on the Electronic Fund Transfer Act (“EFTA”). The EFTA was passed in 1978 to establish consumers’ rights and responsibilities of all participants in electronic funds transfer activities. The Act applies to electronic fund transfers, such as those involving automatic teller machines (ATMs), point-of-sale debit transactions and other electronic banking transactions. It is important to review your electronic fund transfer (EFT) account statements regularly as these documents may contain mistakes that reflect improper transfers and could damage your credit score.
The Act established procedures for resolving mistakes on electronic fund transfer account statements, including transfers that you or anyone you have authorized to use your account have not made; transfers incorrectly identified or showing the wrong amount or date; computation errors; transfers for which you request an explanation or documentation, due to a possible error. Importantly, however, it provides that when an error is recognized, your financial institution has obligations to you to investigate, and where necessary, credit your account to correct the errors.
If you notice an error in an electronic fund transfer relating to your account there are specific steps you must take to comply with the Act. First, under the Act you must write or call the financial institution immediately and no later than 60 days from the date of the erroneous statement. You must provide the name and account number and an explanation of why you believe there is an error with the type, dollar amount and date the error was made. You may be required to send details of the error in writing within 10 business days. In response to your dispute, the financial institution must investigate the error and provide a resolution within 45 days. If it takes more than 10 business days to complete the investigation (20 days for new accounts) the financial institution must re-credit the amount in question until the investigation is complete. Upon completion of the investigation the financial institution must correct the error if it finds one was made and make the re-credit final and if no error exists, provide a written explanation and notify you of the deducted re-credit.
Another important aspect of EFTA is the need for written authorization to take payments from your account. Many times, debt collectors convince (or coerce) consumers to set up regular automatic payments to be removed from the consumer’s bank account on a monthly basis. Whenever a creditor or collector is taking regular monthly payments out of your account, they must obtain your authorization in writing. This is a common mistake made by collection agencies.