It can be very frustrating when an individual’s bank makes a mistake on their account statement. One of the best ways to address a mistake made on an account statement is to send a quick and detailed notice to the bank.
Finding a billing error on a bank statement can be tiring, especially because accuracy and security are important functions of the bank. While there are laws that protect consumers against bank account errors, receiving the full benefits of these protections requires prompt action by the account owner.
How Are Bank Errors Corrected?
The Electronic Fund Transfer Act establishes protections and procedures for individuals who experience mistakes or unauthorized withdrawals from their bank account. If an individual believes their bank account has a mistake on it, there are procedures they must follow to be legally protected, including:
- Writing or calling their financial institution within 60 days of discovering the mistake and describing the error;
- The bank is required to investigate the error and resolve it within 45 days;
- However, if the bank takes longer than ten days to resolve the matter, it generally must put the amount in question back into the account;
- For some issues, such as an error in opening a new account or an international transaction, the bank may be afforded 90 days to investigate the error and;
- The financial institution must explain the results to the account holder at the end of its investigation, regardless of whether it found an error.
If an individual’s ATM or debit card has been stolen or used for identify fraud, they may be able to limit their financial losses by:
- Notifying the financial institution within two business days;
- If that is done within those two days, the losses will be limited to $50, and;
- Even if the individual did not notify their financial institution within two business days, they should still notify their financial institution because their loss will be limited to $500;
- If they do not inform their financial institution within 60 days of receiving the statement containing an illegal withdrawal, the bank will not limit their potential loss.
What Do Bank Billing Errors Look Like?
Most bank billing errors involve open-end credit issues. One of the most common examples of an open line of credit is a credit card or line of credit.
Banks are required to send out periodic statements to all of their customers who have open-end credit. These customers need to pay close attention to their period statements to ensure they correctly reflect the activity on the account.
An individual’s ability to correct bank billing errors will depend on how fast they are caught. Examples of common bank errors include:
- Charges by unauthorized third parties;
- Missed credit for payments received;
- Debits for services that were not received; and
- Simple calculation errors.
When Should I Dispute a Bank Error?
Individuals should dispute a billing error immediately to maximize their chances of resolving it. Under the law, an individual should notify their bank of any errors within 60 days of the bank sending the erroneous statement.
If the bank error involves failing to post a credit, the 60-day time limit runs from sending the statement on which the credit should have appeared. An individual should send a notice of the error to the address on their bank statement.
This notice sent to the bank should include the following:
- The individual’s name;
- Their account number or another important identifier;
- A statement that a billing error occurred and;
- An explanation of the type of error, the date of the error, and the amount of the error.
An individual must prepare copies of documents supporting their assertion, which may include earlier confirmations of payment or receipts.
What Are the Bank’s Obligations?
Once the bank receives an individual’s timely billing error notice, it must provide a written acknowledgment within 30 days unless it resolves the billing error during that time frame. The billing error must typically be resolved within two billing cycles and no later than 90 days after the bank receives the notice.
A bank must respond quickly if an error involves an unauthorized electronic transfer. Electronic transverse may be initiated online, by telephone, or at an ATM.
A bank must investigate an electronic transfer error within 10 business days of receiving the billing error notice. The bank must report the findings to the customer within three days and issue a final correction within one day of determining the error.
What Are My Rights as a Consumer?
During the dispute resolution process, a bank must follow certain rules and respect the rights of individuals as consumers. An individual may withhold any portion of a payment related to the disputed amount.
If an individual does withhold a portion of their payment related to the disputed amount, the bank is not permitted to:
- Initiate collection actions for the disputed amount;
- Make or threaten to make a negative report on their credit history or;
- Close, restrict, accelerate, or report their bank account as delinquent.
If the bank cannot complete the dispute resolution process for an electronic transfer within 10 business days, it must provide the individual with a provisional credit for the disputed amount. If the bank finds that the individual’s complaint is valid, it has to correct the error and credit the individual’s account with the disputed amount.
The bank must also repay the individual any related charges caused by the error, such as minimum balance or overdraft fees. If the bank finds that an error did not occur, it has to notify the individual and explain why it determined the alleged error is incorrect.
An individual can request copies of the documentary evidence the bank used to make the determination.
What Happens if My Bank Finds No Error?
If an individual’s bank complies with all of the required dispute resolution obligations and does not find an error, it must promptly provide the payment due date in writing. The bank must break down the total amount that the individual still owes.
The bank must also allow the individual time to pay the due amount without additional fees. In most situations, the bank can report an individual’s account as delinquent within 10 days after receiving notice.
An individual may delay this process by providing further written notice that they still dispute a portion of the billing error.
How Can I Keep Track of My Financial Health?
An individual can take many steps to keep track of their financial health. They can begin by setting up alerts on their bank accounts to keep tabs on their finances.
Setting up alerts on a bank account can help an individual spot fraud or errors nearly immediately and allow them to act quickly. Individuals can also set up bank account alerts using their bank’s app or website.
Different banks offer different alerts to be placed on individual accounts. Individuals can usually be alerted if their bank account balance is low or when a deposit or withdrawal is made.
An individual may also be able to receive alerts each time their debit card is used at an ATM. It is also important for an individual to keep an eye on their credit score and monitor their bank accounts.
Do I Need a Lawyer if I Feel My Financial Institution Has Violated My Consumer Rights under the EFTA?
If you believe that your financial institution has violated your consumer rights under the EFTA, it is important to consult with a financial lawyer. In addition, you will want to notify your bank and report the financial institution to the proper authorities.
You may be entitled to compensation in a civil lawsuit against the financial institution. Your lawyer will advise you of your state’s laws, the bank’s requirements, your rights, and the best way to proceed to resolve the issue.
