Electronic Fund Transfer Errors Settlement

If you suspect that an error has been made in an electronic transfer of funds, call your bank immediately. The law requires that you make the call within 60 days, but the sooner you give notice the easier it will be to correct any error. Unless the bank asks you to, you need not follow your call with a written description of the error, although it is good practice to do so, since it will provide you with evidence that you notifed the bank. Include your name and account number, the date of the error and a description of the discrepancy. The bank is required to investigate and resolve the problem within 45 days of receipt of your notification. If, however, the bank has not completed its investigation within 10 days, it must provisionally credit your account for the amount you claimed you lost through the error, plus the interest on that amount.

If the bank discovers that your claim is correct, the credit must be made permanent. If the bank disputes your charges, it must inform you of this fact and, at your request, provide you with the documents it used to reach this conclusion.

If you are unable to reach an agreement with the bank, you may take your case to: Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, Washington, D.C. 20551.

If your specific complaint falls outside the jurisdiction of the Federal Reserve, it will direct you to a state body that can help.

Your state banking commission is another source of assistance, as is your state attorney general’s office. Should all else fail, you have the right to go to court and sue the bank for relief.

If your EFT card is lost or stolen and someone else uses it, your liability is limited to $50. But this limitation applies only if you notify the bank within two business days after discovering the loss. If you wait more than two days, your liability may be as much as $500, and if you fail to notify the bank of any unauthorized transfers that appear on your statement within 60 days of the date the statement was sent to you, you could lose everything that was taken.

Since your EFT card can be used by an unauthorized person only if he or she also knows your personal identification number, do not carry a notation of your number in your wallet or handbag, but memorize it instead.

See also Electronic Fund Transfers and Your Rights as an EFT Customer

Tags: EFT+Errors

EFT Customer’s Rights

Like anything else, electronic fund transfers are subject to error. A malfunction in a computer or a mistake by a programmer could, for example, transfer $1,000 from your account to the account of your utility company when in fact your bill was $100. If you lose your automatic teller card and it is found by someone who discovers your personal identification number, that person is in a position to empty your account. To protect bank customers and banks alike, Congress passed the Electronic Fund Transfer Act, which is implemented through Regulation E of the Federal Reserve Board. Following are your rights as an EFT customer.

Statement of Terms. When you open an account with an EFT feature, you are entitled to receive a statement listing all of the terms and liabilities associated with the account.

Receipt. Both automatic teller machines and point of sale terminals must provide you with receipts of all transactions. A receipt includes information on the amount of money transferred, the date of the transfer, the type of account from which the money was withdrawn or in which it was deposited, the name of any financial institution or other party to which funds were transferred and the number of the encoded card that was used to make the transfer.

The monthly statement you receive from the bank must also list all transfers, giving their amounts and dates, including information on preauthorized transfers and those made via telephone. The statement must include the names of the holders of accounts to which you made EFT payments and show all bank fees involved, as well as your balances during the period covered. In addition, it must specify the name and address of the person to whom inquiries are to be directed.

Remember that electronic fund transfers, unlike checks, are recorded immediately and thus should be noted immediately in your deposit and withdrawal records. For example, if you make a POS payment from your checking account directly to a merchant’s, you must have the money available in your account if you are not to be charged for an overdraft.

On the other hand, if you have authorized an EFT transaction in advance, you can stop it, either by oral or written notice, provided you act at least three days before the transfer is scheduled to take place.

If a bank fails to make an EFT transfer when it has been authorized to do so and when the depositor has sufficient funds to cover the transfer; or if it fails to stop payment when it has been properly instructed to do so, it may be held liable for any damages caused to the depositor.

See also Electronic Fund Transfers and EFT Errors Settlement

Electronic Fund Transfers (EFT)

By now, most depositors have some familiarity with the machines in bank lobbies that enable customers to make withdrawals from, or deposits to, savings and checking accounts without the aid of a human teller. But such machines are only one aspect of electronic fund transfers. An increasing number of other transactions are also being handled by computers. Here are descriptions of a few of the electronic services available in a number of banks.

Preauthorized Payments

One of the relatively new forms of electronic banking is the preauthorized payment, in which money is automatically deposited or withdrawn from an individual’s savings or checking account. For example, an employer who is authorized by an employee to do so, may place the employee’s paycheck in his or her account through an electronic fund transfer. Some major companies deposit a single payroll check (actually a computer tape authorizing payment) for all their employees who are patrons of a particular bank. The bank’s computer has already been programmed to divide the payment according to each employee’s salary. A more sophisticated method now coming into use is for the employer to route the total payroll tape to a regional automated clearinghouse, where a computer not only divides the tape into individual payment orders but dispatches these orders — again via computer — to all of the participating banks in the area in which the employees have accounts. Other regular payments, such as Social Security checks or dividend checks, can be, and often are, deposited electronically via automated clearinghouses.

Similarly, an account holder may authorize the bank to transfer money electronically from his or her checking account on a certain day each month to pay the mortgage, the telephone bill and other regular expenses.

Point of Sale Terminals (POS)

These are electronic fund transfer machines located in shopping centers and department stores. Instead of paying for a purchase with a check or cash, or charging it to a credit card, a bank depositor can activate the POS terminal and transfer funds electronically from his or her account to that of the merchant. This is one of the newest forms of electronic fund transfers, but it will probably be some years before the service is available on a nationwide basis.

See also Your Rights as an EFT Customer and EFT Errors Settlement

Tags: Electronic+Fund+Transfers, POS+Terminals, Preauthorized+Payments

Supplemental Bank Services Review

Most banks offer depositors, and in some cases non-depositors as well, a variety of convenience services. Here are some typical examples and their relative costs.

• Safe-deposit boxes. Millions of consumers find these boxes, which are locked and kept in bank vaults, useful for the safekeeping of stock and bond certificates, valuable personal papers, jewelry, sterling silver and other precious objects. Only those whom the renter of the box has designated are allowed entry. (An exception to this rule: law-enforcement officials who have obtained a court order.) The boxes come in a variety of sizes; yearly rentals vary according to size from as little as $10 to as much as $200 or more.
• Money orders. People who do not have checking accounts but wish to pay their bills with a check-like device have the option of purchasing money orders at most banks. The cost — usually $1 or more — is greater than the normal charge for handling a depositor’s personal check.
• Certified checks. Often used in business transactions, a certified check is drawn against the depositor’s personal account and then taken to the bank for certification — a guarantee by the bank to the payee that the check will be honored. The bank does this by freezing the amount of the check in the depos-itor’s account until the certified check has cleared. The bank often charges a small fee for this service.
• Cashier’s Checks. Perhaps the most common financial instrument issued by banks, a cash-ier’s check is one that is drawn on the bank’s own account. Since it is the bank that is liable for payment, a cashier’s check assures the payee that it will be honored.
• Automatic account transfers. As a service to customers who have both savings and checking accounts, many banks will automatically transfer money from the former to the latter to cover an overdraft. The fee for each transfer is usually about $1. Some banks will also make such a transfer on a depositor’s telephoned request.
• Copies of documents. If you lose your copy of a bank account statement or other document, your bank will supply you with a duplicate copy — generally at a cost of $1 to $7.
• Travelers’checks. Some banks issue travelers’ checks without charge to their customers. Other banks charge a fee, for example, either 1 percent of the face value of the travelers’ checks or a flat fee such as $2.50, whichever is greater.

How US Banks Treat Their Customers’ Privacy?

Although information about your bank accounts and transactions is usually a matter between your banker and yourself, there can be exceptions.

State laws vary on bank-account privacy. In some states banks are allowed to reveal to merchants whether a customer has sufficient funds to cover a large check a retailer has just been given for a purchase. Some banks will even reveal the exact balance in an account over the telephone. Check with your own bank as to its policy in this area.

On the other hand, the 1978 Right to Financial Privacy Act places limitations, in certain circumstances, on disclosure of your private bank records to federal officials. Not all requests by the government need be honored. Moreover, if a bank is asked or required to turn over your records to a federal agency, you will usually be notified of that fact.

Whean dealing with a bank, the first step is to try to establish yourself in its mind as a valued, or at least potentially valuable, customer, and to do it on a business like basis. It is important to get this impression across at the start. Never, never start a relationship with a bank by ‘walking in’ and going to the nearest bank officer and announcing ‘I want to open an account.’ Do that, and you are, in his mind, a ‘walk-in,’ and you lose. You are interrupting his work, and worse, coming at him unexpectedly. Beyond that, you are not being what he considers ‘businesslike.’ If he can spin you off down into the vulgar pits of the Special Checking Accounts, he will.

Instead, first learn as much about the bank and its services as you possibly can. Talk to friends, relatives, business associates, your lawyer, your accountant. Above all, ask someone in your company’s treasurer’s office, particularly if the company does business with the bank. If any of these people seems a particularly good reference, and is satisfied with the bank, ask for the name of a specific officer to whom you can speak, using your reference’s name — and, thus, his or her clout.

So, don’t pop in to see the officer unannounced. Call and make an appointment, preferably at the officer’s convenience. If you are capable of doing significant business with the bank — one or more family accounts, a separate business account, possibly trust or investment services — convey these facts immediately. The officer who sees you as someone with “potential,” is apt to give you full attention. Don’t try to impress the banker by spouting off numbers, and don’t launch into an angry attack on your present bank. If you do, you may be instantly labeled as a “bouncer,” one who unhappily goes from one bank to the next and might well choose another again in a month or two.

If you like the bank and are able to work out the details to your satisfaction, open a checking account, and a savings account too, if necessary, with as large a balance as you can reasonably afford. You are probably much better off putting all your accounts in one bank and doing business with it as a regular customer than spreading yourself thin over two or three banks, where you won’t mean much to anyone. Money talks. Even if you have only $5,000 in savings, deposit it all in one bank and let it talk for you there. If you have approached the bank correctly to begin with, you will indeed have a “personal banker” in the officer who signed you up. He or she may turn out to be the financial friend you need, bending the bank’s rules in your favor, if necessary, to get you a loan or offering sound financial advice.

Some people search out a bank about as seriously as they look around for a mailbox or trash can: the nearest one is fine. But it really is not wise to be overly swayed by convenience. It’s always helpful to have a bank branch reasonably handy to your home or place of business, but what you should look for is a bank whose staff is the most knowledgeable and responsive to your needs.

In comparing banks, if you like the idea of being able to get cash or conduct other financial business at odd hours, or wherever you happen to be, you may want to consider a network: either one owned by a large institution or one shared by a number of smaller banks. An interstate network enables a customer of any of the member banks to use other members’ ATM machines for any routine banking transaction, including depositing or withdrawing money. The holders of one main credit card have their own growing system: they can draw cash or travelers checks from 24-hour machines at more than a thousand locations around the country at airports, supermarkets and banks. An increasing number of savings and loan companies and credit unions are also making use of electronic tie ins.

If you expect to be depositing your paychecks, pension or dividend checks, or conducting other business regularly in person, observe the lines at the counters during peak hours when everyone else is apt to be doing the same thing — from noon to 3 P.M. on Fridays, for example, particularly those falling on major paydays around the 15th and 30th of the month. If the lines look intolerably long — there can be more than a half hour wait at some big-city banks — you might find faster, less harried service on Tuesdays or Wednesdays, generally the quietest days of the week. Or you can inquire if the bank will arrange for automatic deposit of your checks so that you do not have to go there at all.

Read more: Criteria when Choosing a Bank

In looking around for the financial institution that best serves your purposes — assuming there is more than one commercial bank, savings institution or credit union to choose from where you live — first determine what you really want to use it for: savings, checking, a credit card, online banking, a personal loan or home mortgage, stock purchases or a combination of several or all of these. Compare each bank’s offerings and policies on minimum balances and fees.

On the other hand, don’t overlook the length of time each holds different kinds of checks deposited in your account before permitting you to draw on the funds they represent. Most banks clear a local check immediately or in a day or two, but others can take as long as 10 days; in a few instances out-of-town checks have taken as long as three weeks to clear.

Banks have claimed that they maintain waiting periods in order to prevent losses on bad checks, but critics have pointed out that only about 1 percent of all checks passed turn out to be no good. Moreover, banks can get credit for checks from the Federal Reserve usually within 24 to 48 hours, then invest the money to make more money for themselves, a strategy known as “playing the float.” In effect, depositors are giving the bank free loans of their money for days or even weeks. Public and legislative pressure has already forced banks to cut down on their holding time, but it still pays to compare. Ask also if a bank officer can give clearance to make needed funds immediately available in emergencies, or to cover checks written against deposits you were given to believe had already been credited to your account.

If there is a chance that you will need a personal loan or a new mortgage within the next year or two, by all means inquire now about a bank’s rates and policies. Many banks will give their depositors preference over others, particularly when loan money is tight. If you are a good customer — and if you ask — you may even be able to get a preferential rate as much as 1 or 2 percent lower than that offered outside applicants.

In picking a bank, it is well to bear in mind two facts of financial life. One is that bankers, especially when they are parting with depositors’ money, like to deal with someone they know. The second is the Golden Rule of 80-20: some 80 percent of a bank’s income, on average, derives from 20 percent of its clients — so it pays the bank to be particularly cooperative with that ctop one-fifth. Putting those facts together before starting to deal with a bank at least starts a customer on the right track. To the two banker’s canons you might add one of your own: banks need you at least as much as you need them.

Read more: Shopping for a Bank

Part Two

Increasingly, banks and other financial service companies are merging and maneuvering toward regional networks and “one-stop shopping” for all a consumer’s financial needs, with the result that old distinctions among financial institutions are becoming blurred. In addition to different kinds of checking and savings accounts, money market accounts, certificates of deposit, loans, credit cards and 24-hour cash machines, more and more financial institutions are offering such services as automatic check depositing and bill paying. A few are even offering discount stock brokerage services, some types of insurance and a host of other enticements.

Both banks and brokerage firms, trying to intrude on each other’s traditional territories, have been pushing comprehensive accounts that combine banking and brokerage services. In return for depositing some specified minimum in cash, or a combination of cash and securities, and for the payment of an annual service fee, a customer gets the following: a high-yielding money market fund (into which all idle cash in the account is periodically swept); check-writing privileges; the buying and selling of stocks and bonds; a credit or debit card for cash withdrawals or purchases and a line of credit against which to draw. If present trends continue, some industry observers see the day when banks will be able to offer an even wider range of services, including data processing, all kinds of insurance and the buying and selling, as well as financing, of real estate.

In all, banking has become a decidedly lively, if sometimes bewildering, affair. In today’s financial landscape, the choices are not only broader and potentially more rewarding, but often far more complex than in the past. It pays not only to shop around, but to look carefully at the fine print behind the glowing offers and to ask questions if you don’t understand. What services are actually rendered, and at what actual total cost? How much do any hidden fees and charges add? How long do advertised interest rates apply, how often can they change and to what index, if any, are they tied? Perhaps most important, which basic services and which extras do you really need, and which can you easily do without — or get elsewhere at a reasonable price if the need arises?

Financial institutions are not charitable organizations, and what they lose in one area they have to make up for somewhere else. Higher rates offered for savings may be reflected, eventually if not immediately, in higher rates demanded for loans. Some bank services that were provided free in the past are already carrying new charges in order to pay their way. Fixed rates may have to yield to more realistic, variable rates on loans and credit cards — indeed, they are already doing so, particularly in the area of real estate loans.

Go back to the Part One

Part One 

Scarcely a decade ago, banking was still a relatively cut-and-dried business. Except for your convenience, it didn’t make much difference which bank you dealt with: interest rates, loans and other services were pretty much the same.

All that has changed. Today, thanks to continuing government deregulation and superheated competition among all sorts of financial institutions, banking is in the throes of a revolution and important changes are taking place constantly. “What you have now is a free-for-all,” says one industry analyst. “Virtually any kind of business can go into bankling, while banking is making important inroads where it has been forbidden before.”

The battle to woo customers, especially those with good incomes and/or substantial amounts of money to invest, can be followed in online advertisements and broadcast commercials every day. One institution upstages another with higher interest rates, more lavish “free gifts” or more tempting promises of attention from your “personal banker.”

Many institutions offer their clients “instant access” to their money through conveniently located, 24-hour machines and online access. These electronic conveniences provide cash on command, even on a deserted street at 2 a.m. when you’re broke and need money for a taxicab to get home. Some banks, indeed, make it clear that they prefer their less affluent depositors to use the machines regularly, even during banking hours — so that the banks can reserve the costlier services of human tellers for those with enough money on deposit to maintain “express” or “priority service” accounts.

Go to the Part Two