What About Credit Loss or Theft?


It's important to be aware of the potential risk in using
an EFT card, which differs from the risk on a credit card.

On lost or stolen credit cards, your loss is limited to
$50 per card (see page 25). On an EFT card, your liability for
an unauthorized withdrawal can vary:

-- Your loss is limited to $50 if you notify the financial
institution within two business days after learning of
loss or theft of your card or code.

-- But, you could lose as much as $500 if you do not tell the
card issuer within two business days after learning of the
loss or theft.

-- If you do not report an unauthorized transfer that appears
on your statement within 60 days after the statement is
mailed to you, you risk unlimited loss on transfers made
after the 60-day period. That means you could lose all the
money in your account plus your maximum overdraft line of
credit.

Example:

On Monday, John's debit card and secret code were stolen.
On Tuesday, the thief withdrew $250, all the money John had in
his checking account. Five days later, the thief withdrew
another $500, triggering John's overdraft line of credit. John
did not realize his card was stolen until he received a
statement from the bank, showing withdrawals of $750 he did
not make. He called the bank right away. John's liability is
$50.

Now suppose that when John got his bank statement he
didn't look at it and didn't call the bank. Seventy days after
the statement was mailed to john, the thief withdrew another
$1,000, reaching the limit on John's line of credit. In this
case, John would be liable for $1,050 ($50 for transfers before
the end of the 60 days; $1,000 for transfers made more than 60
days after the statement was mailed).

What About Solicitations?


A financial institution may send you an EFT card that is
VALID FOR USE only if you ask for one, or to replace or renew
an expiring card. The financial institution must also give you
the following information about your rights and
responsibilities:

-- A notice of your liability in case the card is lost or
stolen;

-- A telephone number for reporting loss or theft of the card
or an unauthorized transfer;

-- A description of its error resolution procedures;

-- The kinds of electronic fund transfers you may make and
any limits on the frequency or dollar amounts of such
transfers;

-- Any charge by the institution for using EFT services;

-- Your right to receive records of electronic fund transfers; 

-- How to stop payment of a preauthorized transfer;

-- The financial institution's liability to you for any
failure to make or to stop transfers; and

-- The conditions under which a financial institution will
give information to third parties about your account.

Generally, you must also get advance notice of any change
in the account that would increase your costs or liability, or
limit transfers.

A financial institution may send you a card you did not
request only if the card is NOT VALID FOR USE. An "unsolicited"
card can be validated only at your request and only after the
institution makes sure that you are the person whose name is on
the card. It must also be sent with instructions on how to
dispose of an unwanted card.


Do I Have to Use EFT?


The EFT Act forbids a creditor from requiring you to repay
a loan or other credit by EFT, except in the case of overdraft
checking plans. And, although your employer or a government
agency can require you to receive your salary or a government
benefit by electronic transfer, you have the right to choose
the financial institution that will receive your funds.


Special Questions About Preauthorized Plans


Q. How will I know a preauthorized credit has been made?

A. There are various ways you may be notified. Notice may
be given by your employer (or whoever is sending the funds)
that the deposit has been sent to your financial institution.
Otherwise, a financial institution may provide notice when it
has received the credit or will send you a notice only when it
has not received the funds. Financial institutions also have
the option of giving you a telephone number you can call to
check on a preauthorized credit.

Q. How do I stop a preauthorized payment?

A. You may stop any preauthorized payment by calling or
writing the financial institution, so that your order is
received at least three business days before the payment date.
Written confirmation of a telephone notice to stop payment may
be required.

Q. If the payments I preauthorize vary in amount from
month to month, how will I know how much will be transferred
out of my account?

A. You have the right to be notified of all varying
payments at least 10 days in advance.

Or, you may choose to specify a range of amounts and to be
told only when a transfer falls outside that range. You may
also choose to be told only when a transfer differs by a
certain amount from the previous payment to the same company.

Q. Do the EFT Act protections apply to all preauthorized
plans?

A. No. They do not apply to automatic transfers from your
account to the institution that holds your account or vice
versa. For example, they do not apply to automatic payments
made on a mortgage held by the financial institution where you
have your EFT account. The EFT Act also does not apply to
automatic transfers among your accounts at one financial 
institution.

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