FCBA and EFTA
Another issue includes mistakes made by financial institutions. Account numbers, transfers and other items are subject to errors. These errors can be costly to you, if they are not remedies. The Fair Credit Billing Credit Act (FCBA) and the Electronic Fund Transfer Act (EFTA) are two laws that protect you from mistakes made by financial institutions, and from certain fraudulent practices.
FCBA and EFTA: The basics
These two laws are different, but they protect a lot of the same things, and do so in many of the same ways. However, it is important to understand the basic differences between these two laws:
- The Fair Credit Billing Act applies to certain types of credit accounts. These accounts include department store credit cards, regular credit cards and checking accounts with overdraft protection. (It is important to note that overdraft protection is really another sort of loan.) FCBA does not apply to installment credit accounts that are paid on a regular schedule. Car loans and department store installment loans are examples of types of credit that are not covered under the Fair Credit Billing Act.
- The Electronic Fund Transfer Act applies to banking transactions that take place electronically. Electronic banking transactions include such items as automatic teller machines (ATMs), fund transfers made electronically (over wires or over the Internet) and debit transactions that take place at the store. This law was passed to protect those that use different types of electronic transactions, but aren't credit cards.
Both the FCBA and the EFTA have similar protections that cover the specific types of transactions listed above. Here are some of the protections you can expect when it comes to credit and electronic transactions:
- You are not liable for unauthorized purchases. If you did not authorize a purchase or electronic fund transfer, you are not liable for the expense. However, there are certain steps you have to take (usually notifying the police and the financial institution in a timely manner) in order for the law to apply to you. If your physical card is stolen, you must notify within three days. If an authorized charges or transfers were made, but you still have your physical card, you usually have 60 days.
- You cannot be charged for errors. If your account number, the wrong amount or are otherwise identified incorrectly, you cannot be held accountable for the mistake. And you can't be charged fees for the consequences resulting from such errors. The same is true of payments, credits and electronic fund transfers that are incorrect.
- Issues arising from a change of address. As long as you notify the creditor of your new address, in writing, 20 days before the end of your billing period, you are protected from fees and charges resulting from you not getting your statement in a timely manner.
- You are entitled to explanations of errors and other problems. Creditors and other financial institutions have to notify you of errors, and what was done to resolve them. Additionally, institutions must notify you of other issues and breaches, such as the possibility that your personal information was stolen.
Even with today's excellent technology, there is still the potential for errors. It is important to realize that you cannot be held accountable for costly errors – or for charges made with stolen or fraudulent information. Your credit is your financial reputation, and you should know your consumer rights with regard to protecting it.
You can find out more information about the Fair Credit Billing Act and the Electronic Fund Transfer Act by visiting the Federal Trade Commission Web site at www.ftc.gov.
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