Money has disappeared from your bank account, but you did not make the withdrawal. Your debit card is still in your wallet, yet someone has used its details to spend your money. What happens next?
Unauthorized transactions can leave consumers facing financial losses and a bank that questions their account of events. Understanding your rights under federal law can help you challenge a denial and protect your money.
What Counts as an Unauthorized Financial Transaction?
Under the Electronic Fund Transfer Act (EFTA), an unauthorized electronic transfer generally involves someone initiating a transfer from your account without your actual authority, where you receive no benefit from it. Examples include fraudulent debit card purchases, ATM withdrawals, and online transfers.
Criminals may also use stolen personal information to access financial accounts, so recognizing the signs of identity theft can help you identify suspicious activity.
Card skimming is one example. Criminals can copy card information and use it to create a counterfeit card, meaning your original card may never leave your possession. Someone accessing your online banking without permission can also initiate unauthorized transfers.
Not every scam payment qualifies as unauthorized under the EFTA. If you personally approve a transfer after being deceived, the legal position may be different. The facts matter, including how the payment was initiated and whether you actually authorized it.
What Protections Does Federal Law Provide?
The EFTA and its implementing rule, Regulation E, limit consumer liability for qualifying unauthorized transfers. If your card or other access device is lost or stolen, reporting the loss within two business days of discovering it generally limits your liability to $50. Different rules apply when reporting is delayed or unauthorized transfers appear on your statement.
Banks must investigate reported errors and generally have 10 business days to do so. They may take longer in qualifying circumstances, but generally must provide provisional credit within that initial period when required by law. These EFTA consumer protections establish obligations banks must follow when handling disputed transfers.
Credit card disputes are governed by different rules. Under the Fair Credit Billing Act, consumers generally have 60 days after a statement is sent to dispute certain billing errors in writing. For electronic transfers, the EFTA also imposes important reporting deadlines, including a 60-day deadline for reporting certain errors shown on account statements.
What Should You Do if You Discover Fraud?
Contact your bank immediately. Report the transactions, ask the bank to secure your account, and follow its dispute procedures. Put your complaint in writing as well, using a secure message system if available, and keep a copy.
Preserve your evidence. Save bank statements, transaction details, messages, and letters. Record when you reported the problem and what bank representatives told you. You can also file a police report and report suspected identity theft through IdentityTheft.gov.
Protect your other accounts. Change compromised passwords, enable multifactor authentication, and consider a credit freeze or fraud alert if your personal information has been exposed. If you believe a company has engaged in unfair or deceptive practices, a Maryland consumer protection attorney can help you understand your legal options.
What if Your Bank Denies Your Claim?
A denial does not automatically mean the bank is right. If the institution concludes that no error occurred, Regulation E generally requires it to explain its findings and inform you of your right to request the documents it relied on. You can request those documents in writing.
An attorney can help determine whether your bank violated federal law by denying your claim and whether you may be entitled to compensation for your losses.
How Holland Law Firm Can Help
Unauthorized transactions can create serious financial problems, particularly when a bank refuses to reimburse the disputed amount. Depending on the circumstances, consumers may have legal remedies if a financial institution fails to comply with the EFTA.
If you believe your bank mishandled a fraud claim, contact Holland Law Firm to discuss your situation and the options that may be available.