Funds Stolen from Your Bank Account? Here’s What you need to Know.

At Rose Consumer Law, we are seeing increasing instances of electronic theft from consumer bank accounts. One day, you check your bank account, and…. Where’s my money!

The law provides some protection, an opportunity to get your money back. Unfortunately, banks are ducking their legal obligation to safeguard customer funds. Here’s what you need to know.

The Electronic Funds Transfer Act (EFTA) 15 U.S.C. 1693 et seq. is designed to protect consumers from unauthorized electronic transfers. It requires banks to reimburse consumer customers for unauthorized withdrawals and, importantly, under EFTA, the bank bears the burden of proof – that is: when you claim a transfer was fraudulent, the bank must prove that it was not . They must prove that you authorized it.

EFTA does not protect against all theft. For EFTA to apply, the transfer must be:

1.      By electronic means, for example, by debit card, ATM withdrawal, point of sale terminal, or by a remote (online) banking transfer - wire transfers and written checks are not covered;

2.      From a consumer account – EFTA does not protect business accounts;

3.      Initiated by someone other than the consumer without the authority to make the transfer; and,

4.      The consumer must receive no benefit.

Common forms of theft include wire transfers and scams.

Wire Transfers

EFTA does not apply to wire transfers. The California Uniform Commercial Code (UCC) covers theft by wire fraud. The UCC is a business statute, designed to facilitate commerce, not protect consumers. To recover under the UCC for theft by wire transfer, you must prove that the bank (or other financial institution) acted in a commercially unreasonable manner. Unlike EFTA, the burden of proof is on you, not the bank. That sets a high bar. Wire transfers are designed to be quick and final – to facilitate commerce.  The bank gets wire instructions and complies. How are they to know it isn't you? Further, the case will be before an arbitrator, under the arbitration clause in your account agreement. Banks are good at keeping customers away from sympathetic juries. Finally, the UCC does not authorize attorneys’ fees to the prevailing party. As a law firm, we’ve learned our lesson and don’t take wire transfer cases, UNLESS, that is: the thieves first transferred funds electronically from a savings account to a checking account before sending the wire from there. That preliminary electronic transfer makes it an EFTA case where we can help!

Scams

EFTA can protect you against scams to a certain extent. If you were tricked into providing your personal information to a scammer, the issue is: who made the actual withdrawal. If you did and then gave funds to the scammer, EFTA can’t help. However, under EFTA if the thief – not you- withdrew the funds, the bank cannot defend itself by claiming you were negligent in getting scammed and therefore are responsible for your loss. You are not.

What You Should Do

If money was taken from your account by an unauthorized electronic funds transfer, you should notify the bank immediately. Under EFTA, to hold a bank to be liable for an unauthorized electronic funds transfer, you must report the loss within 60 days from the date of your bank statement showing the loss. The report should be in writing – email is okay – or if made by telephone, you should record the call (and, keep a copy of the recording!) Once notified, the bank must investigate, pursuant to guidelines established by EFTA and, within a limited time, inform you of the results.

If the bank denies your claim, you should promptly contact legal counsel. EFTA allows you to collect Treble Damages, under certain circumstances including the financial institution’s failure to make a good faith investigation or denying your claim without a reasonable basis for doing so.  See: 15 U.S.C. § 1693f(e).

If you have questions about your ability to recover money stolen from your bank account, call us. The consultation is FREE and you are under no obligation. We’d be pleased to speak with you and review your case.