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EFTA and Preauthorized Plans
Special Questions about Preauthorized Plans
A consumer will acquire knowledge about a preauthorized deposit when he will be notified either by the person or institution providing the funds or by the financial institution receiving it on his behalf. Any preauthorized payment can be stopped by verbal or written instruction.
A consumer also has the right to know about any varying payments to be made during any particular period in case of preauthorized plans. EFT, however, does not apply to transfers from the account of a consumer to the institution where the account is maintained and vice versa. It also does not apply to automatic transfer of funds from your one account to another in the same institution.
Are all Electronic Transactions Covered by EFTA?
Though most of the electronic fund transfers are regulated by EFTA, there are certain systems that do not come within its purview. Prepaid telephone cards, mass transit passes, gift cards are stored-value cards and these do not come within the area of EFTA. So for loss or misuse of these types of cards, a consumer is not covered.
Rights under EFTA
To properly appreciate the rights of a consumer under the EFTA, it is necessary to understand the Electronic Fund Transfer Act, the electronic fund transfer act and regulation, EFT definition, EFT processing, EFT transaction and EFT electronic funds transfer. It is also necessary to carefully go through the terms and conditions laid down by the provider in documents supplied to you. Normally, the system of electronic fund transfer authentication requires a card or a PIN (Personal Identification Number). The institution is required to provide the consumer will the following information before such consumer enter into the first act of EFT:
- Liabilities and responsibilities of consumer for unauthorized transfers.
- Contact number and address of representative of the institution who should be contacted in case of disputes.
- Types of transfer allowed, fees to be paid and limits on frequencies of transfer.
- Details of statements and information to be received by you.
- Your rights about stop-payment option.
- Error reporting procedure.
- Liability of the institution in case of failure to provide service or stop certain transactions.
- Disclosure of your information to a third party and circumstances thereof.
- Information on charges to be paid on ATM or Debit card where you have no account.
- Terminal receipts on completed transactions. No terminal receipts are provided for recurring transactions like LIC installments etc.
- Periodical statements indicating the status of your account and transactions made.
You must keep and compare all EFT receipts and periodic statements to save your account from being tampered in any manner and to have evidences at hand in case of any dispute with the financial institution.
Other Rights
The EFT Act comes to the rescue of the consumer in two specific cases. First, financial institutions can not force you to repay a loan by EFT processing. Secondly, if you are receiving your salary or other benefits through EFT, you have the right to choose the institution.
Complaints under EFTA
If a customer feels that he has been wronged or there is some error in his statement, then he can complain to the appropriate authority. The authority with whom a consumer should file complaints in respect a particular category of financial institution is listed below: -
| Type of Financial Institution |
Authority to whom complains is to be made |
| State Member Banks of the Federal Reserve System. |
Consumer and Community Affairs Board of Governors of the Federal Reserve System
20th & C Streets, NW, Mail Stop 801
Washington, DC 20551
www.federalreserve.gov
|
| National Banks |
Office of the Comptroller of the Currency
Compliance Management
Mail Stop 7-5
Washington, DC 20219
www.occ.treas.gov
|
| Federal Credit Unions |
National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314
www.ncua.gov
|
| Non-member Federally Insured Banks |
Office of Consumer Programs
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
www.fdic.gov
|
| Federally Insured Savings and Loans, and Federally Chartered State Banks |
Consumer Affairs Program
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
www.ots.treas.gov
|
If a consumer feels that the institution or company has failed to fulfill its responsibilities under the Electronic Fund Transfer Act, he should immediately contact the financial institution or company. The financial institution or company should then perform as provided in the Electronic Fund Transfer Act and Regulations made there under. In case the institution or company fails to respond adequately, the consumer is at liberty to take necessary action by filing complaints to appropriate authority under the Electronic Fund Transfer Act.
Thus, the Electronic Fund Transfer Act provides a reasonably good amount of protection to consumers against wrong doing by the institutions while making electronic fund transfer, though it does not cover certain aspects like stored-value EFT.
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