Unauthorized Electronic Fund Transfers

At times unauthorized electronic fund transfers can occur quite innocently when the lines of communication between you and a company are disrupted somehow.

Though these types of unauthorized electronic fund transfers are considered more of an error, sometimes the meaning of error and unauthorized get blurred.

Maybe you have a product shipped to you every month and you now have decided that you need to tighten your budget and this product just isn't needed anymore.

You call the company and let them know that you will be cancelling your service. The customer service rep. attends to your needs and maybe even gives you a confirmation number (many times it's a good idea to ask for one if it's not offered). Somehow the cancellation isn't recorded properly or not at all and the charge goes through just as usual.

Another seemingly common way unauthorized electronic fund transfers may occur are by the way of those "free" trial product offers. There is usually a time limit and your credit info or bank info is taken. If you do not cancel the offer by the date or whatever stipulation may apply a charge is usually made.

Many offers made this way are by reputable companies, but there are those that are not of such reputable character and this is where many of the unauthorized electronic fund transfers can arise.

Then again there are times when you are dealing with a highly reputable company, but the process to cancel regular payments may be more involved than you realize and you do not fully follow the process. When not followed properly the company has no obligation to stop the payment process. This, many times will be when you will want to follow up a verbal cancellation with a written one.

Whichever the case may be there are steps to follow and reminders that will help the process.

*  The phone call

When you are dealing with a reputable company usually a phone call is all that is needed to clear up any misunderstandings. However there are those companies that use tactics such as undisclosed requirements to cancel their products and insist on these as the valid reason why the charges continue after the account was closed by the consumer.

* Reviewing terms of agreements

In any transaction involving electronic fund transfers it is best to review the terms stated for cancellation of any services or product delivery. Also important to read are the disclosures the bank gave you when you opened your account that allowed you to access such an electronic fund transfer.

Usually we are talking about a credit or debit card. The terms may be different for a debit card as opposed to a credit. So pay close attention to details.

Many cause themselves problems and anxiety when not paying attention to these details.

Often times we are overly busy and do not concern ourselves with these details and many a difficult situation can be created when the terms of cancellation are not followed. If you have not reviewed the terms of use of your credit card or debit card it would be wise to read that. If you do not have them you can request another copy or if you go to the hosting bank's website many times you can find a list of their disclosures.

  • You will find information such as when you will receive receipts for payments.
  • When you will receive statements or notices about certain payments made this way.
  • It will underline the individual banks requirements and expectations when there is an error or unauthorized charge.

There are other means of electronic fund transfers such as a check conversion. In this case you would be making out the check and it would be transferred into an electronic payment in front of you.

You are usually personally authorizing that transfer unless someone forged your check and used it on a payment and those on the receiving end did not ask for identification.

What the law states about these transfers that are unauthorized

If you have read the electronic funds transfer act on this website you will have found that unauthorized electronic fund transfer are ones that are initiated by someone other than the consumer who has no actual authority to do so or that the consumer received no benefit from the transaction.

Once you have cancelled an agreement the other party does not have the authorization to process a transfer any longer. That is why it may be important to have some sort of proof of cancellation.

Other areas of unauthorized electronic fund transfers are considered errors. Some are true errors and others may be made to look like errors from unscrupulous companies that are only there for a profit.

In either case the electronic funds transfer act states that you have 60 days to correct that error. SO regular monitoring of accounts is necessary. This is one action that is stressed many times on this website. We all need regular monitoring especially in the light of increased credit fraud situations.

After 60 days that payment is yours. If you didn't monitor your accounts before that, I'm sure paying for something you no longer want or need or worse never acquired will be enough discipline to get you going. I HOPE!!

steps to take with a transfer that is unauthorized

The next step that most know to initiate when a company is resistant to stopping transfers or refunding those that were not authorized is to go to the bank and perform what is known as a charge back (or an error correction if it were an erroneous amount but authorized transaction).

The Federal Trade commission suggests that you back up a verbal communication of unauthorized electronic fund transfers with a certified letter with a return receipt request to prove you alerted them within the 60 days. Though if you are able to visit the financial institution you will most likely fill out a form claiming unauthorized charges and you will be given a copy at that time.

The institution has 10 days to investigate any unauthorized electronic fund transfers and is required to send a written notice of their findings within 3 days of those findings. If an error is found they are required to return the funds to your account within 1 day. They may have the occasion where they return the funds but still need time to complete an investigation. If they find no error they must tell you in writing and explain but they also will take the funds back once again. Another area to beware!!

If the unauthorized electronic fund transfer is a result of a lost or stolen credit or debit card then there is no gray area and clearly unauthorized. Yet there can be a great more deal of concern regarding a debit card.

With the credit card you cannot lose anymore than $50.00 again as long as you are alerting your financial institution promptly.

With a debit card

much more can be lost with unauthorized electronic fund transfers and time is of the essence. You are required to notify the institution by 2 days of noticing it missing. You will only be libel for $50.00. If the 60 day time frame goes by you can be held accountable for up to $500.00. After that they can take everything, clean you out including any possible remaining balance on a line of credit you may have to cover overdrafts.

For this reason it is strongly suggested that you limit debit card use or heavily monitor your use of that account.

Certainly you should only have one account with a debit card attached. That card should always be in view if it is used regularly or tucked away safely if not. It should be stored somewhere that you will notice quickly that it is missing yet out of the reach of those who may "borrow" it.

Now to address the reason for this page's creation which is what to do when you are dealing with a less than reputable company that is resistive to returning funds or a bank that does not do it's FULL job of dealing with the situation in your behalf with unauthorized electronic fund transfers.

As  mentioned in the beginning of this page many unauthorized electronic fund transfers happen by way of those free trial products. I have purchased many wonderful products this way and have been burned by a few. The product can be amazing but the companies used to market these are sometimes unorganized or at times down right unethical.

Before getting involved with any product this way, it is strongly urged to do an internet search of the product. Hopefully you will find more information and any complaints others will have. Though if the product is new they may not exist yet.

Another resource in this area is the rip off report. Their consumer resource page is filled with beware information.

 A story and further steps with unauthorized transfers

Now I'm going to tell you the story of my unauthorized electronic fund transfer that still infuriates me as I didn't know the law concerning them or all my options.

I purchased a product as a result of a radio commercial as a trial. This company has since changed hands and gone out of business, though the product still exists and is being sold at half it's price on Amazon. (This is what happens when you don't conduct business honestly or treat people right.)

One of the problems with this product was the full terms were not established, yet there was a clear and understandable way to cancel the product if not happy. There were several issues with this product so cancellation was my choice.

So the prescribed way to end this offer was to go to their website to cancel their product and the autoship of that product that would ensue if I did not cancel. Apparently the cancellation feature of the website was not working correctly which later it became obvious was intentional.

I soon learned that the product was not cancelled as another monthly supply came to my door much earlier than would have been expected had I not even cancelled. I soon learned that I had two expensive charges accounted to my debit card. I was charged full price for my free trial and the next shipment that came 2 1/2 weeks too early.

A call to this company got me "I need the cancellation number" which I never received and "we cannot take back any shipments claiming their state law didn't allow any returns". Bunk!!

I was successful at arguing that nowhere on their website did it state that you would be charged full price for the trial after the trial period. So one charge was removed but they would not budge on the unopened followup shipment I received that they stated I could not return.

Next came a trip to the bank to claim an unauthorized electronic fund transfer. Paperwork was signed and the unauthorized charge amount back in my account. No extra paper work from the bank yet I believe that is what was expected if one reads the electronic funds transfer act.

When you receive money back into your account after claiming unauthorized electronic fund transfers, I guess you don't really care about any concluding paperwork, not that I knew at the time that there should have been any.

That though was NOT the end of the story.

I was asked by my bank at the initial signing of forms to also change my debit card number so that it will not happen again.

Four months go by and suddenly the same charge appears on my statement again!! The company name is slightly changed but the same phone number. Once again a call to the company. They are trying to convince me that they are not the same company. Well if not, what are they charging me for?? They were trying to make me believe I bought something and just forgot what it was!!! Really?? They think everyone they deal with are idiots? Like this would be true or I would buy the story??

Again a visit to my bank for another unauthorized electronic fund transfer. Again I was told I would be receiving paper work that never came except this time no funds put back into my account. What was alarming was the attitude of the bank.( I no longer do business with them. I spitefully leave $4.40 in that account so they can put out the expense of having to pay for postage to send a statement for an account that has almost nothing in it.)

Several weeks went by, then I began calling the bank. I was told someone in a special department handled those transactions yet when I was connected to that department I was always made to leave a message. Several messages later with no return phone calls made me ask for a manager. This instantly got the person in charge of handling the unauthorized electronic fund transfers to answer the phone.

At this point I had lost patience and lectured her on her professionalism and lack of customer service. It did get me some action but she caved in to this companies repeated excuses that they KNEW they owed me money but couldn't get their system to initialize the payment. RIGHT!!

My next step was the attorney general mistakenly thinking they would "give it " to the bank for not properly conducting unauthorized electronic fund transfers. Wrong!! If you are not part of a group of people with the same complaint the attorney general doesn't work with you. They do not deal with individual cases. They are also not the governing commission over banks. They hand the work off to a consumer advocate group which usually can work pretty well in most situations. Not with this company!!

They at this point already had their own attorney general on their back and knew how to tell them what they wanted to hear and change whatever they HAD to change to get them to go away. The advocates I was directed to took months of working with this company to only get where my bank got. The company agreeing they owed me money but their hands were tied.

What I was advised to do then was to take them to small claims court. A 30 day demand letter was required (in my state) before I actually took them to court. If they don't rectify the situation in that time there is the possibility that you can get 3-4 times the amount and possibly court costs and legal fees if any are needed in the end.

I was not able to continue as there were sickness and death in the family that took the focus on this situation away. When I came back to search for the company I found no results.

I no longer use free trials. Though, as a business person that makes me sad. I think an honest and legitimate company could use them as a great resource to get their product out in the market and well known.

What I may still do is complain about the bank not handling unauthorized electronic fund transfers properly. I feel that they could have done more and the second charge should never have occurred.

The Federal Trade commission suggests that if a financial institution has failed in their responsibilities that complaints may be lodged at the following agencies.

Each of these are also a great wealth of information about many financial matters.

Office of the Comptroller of the Currency:

Regulates banks with “national” in the name or “N.A.” after the name:

Office of the Ombudsman
Customer Assistance Group
1301 McKinney Street, Suite 3450
Houston, TX 77010
toll-free 800-613-6743
office of the comptroller

Board of Governors of the Federal Reserve System:

Regulates state-chartered banks that are members of the Federal Reserve System, bank holding companies, and branches of foreign banks:

Federal Reserve Consumer Help
PO Box 1200
Minneapolis, MN 55480
toll-free 888-851-1920 (TTY:877-766-8533)
federal reserve

Federal Deposit Insurance Corporation:

Regulates state-chartered banks that are not members of the Federal Reserve System:

Division of Supervision and Consumer Protection
550 17th Street, NW
Washington, DC 20429
toll-free 877-ASK-FDIC (275-3342)

National Credit Union Administration:

Regulates federally chartered credit unions:

Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, VA 22314-3428

Office of Thrift Supervision:

Regulates federal savings and loan associations and federal savings banks:

This website says that the office of the comptroller took over supervision of federal savings institutions. You can allow it to redirect you or cancel to check out the information on that page.

Consumer Programs
1700 G Street, NW
Washington, DC 20552
toll-free 800-842-6929

Federal Trade Commission:

Regulates non-bank lenders:

Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
toll-free 877-FTC-HELP(382-4357)

Unauthorized electronic fund transfers occur in many more ways than these free trial offers. Some can be as troubling as this situation was for me.

Banks, I believe, may consider these types of unauthorized charges as an inconvenience that they do not want to deal with. They do have responsibility in the matter.

WE need to make them realize this.

Hopefully you will not need to go to these extremes with the banking institution you are associated with, yet if you do, YOU will have a clear outline of their responsibilities and your options clearly before you.

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