Who is Responsible for Unauthorized Charges in a Bank Account?

Who is Responsible for Unauthorized Charges in a Bank Account?


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By Carrie Kerskie, Director of the Identity Fraud Institute at Hodges University

Last week, I received a call from John, an identity theft victim. John told me that someone had purchased more than $100 worth of goods or services from China using his debit card. He stated, he called his bank and disputed the charges. The bank stated they would investigate the charge and get back to him.

The next month, John reviewed his bank statement and confirmed the unauthorized charge was removed and returned to his account. However, he noticed a new fraudulent charge for a similar amount. Again, the transaction was for goods or services from China. He immediately contacted his bank to dispute, yet again, another fraudulent charge. He asked the representative why they would allow the unauthorized charge to go through again, so the representative reviewed his account. The representative had bad news for John. The two most recent charges were actually recurring charges. The first charge occurred in January; it was now August.

John was furious. How could the bank let this happen? Why didn’t they notify him? To make matters worse, the bank stated they would only reverse the charges on the two most recent unauthorized charges, which were the ones that occurred within the past 60 days.

Who is Responsible?

First, I am not an attorney, and this information is not to be considered legal advice. The Electronic Funds Transfer Act (EFTA) mandates that statement discrepancies must be reported to your financial institution within a maximum of 60 days after the statement with the discrepancy was sent to you. The law was written to protect consumers from fraudulent transactions. However, the law also requires the consumer to be responsible for monitoring his or her bank statement for accuracy.

Unfortunately for John, he learned this the hard way. If he had only taken the time, each month, to review his bank statement, he would have caught this in the beginning, which would have saved him time and money.

There is a similar law applying to credit cards, which is the Fair Credit Billing Act (FCBA). The FCBA mandates you are not liable for billing errors or unauthorized charges as long as you report it within 60 days after the first bill with the discrepancy was sent to you. It should be noted, the law does state your maximum out of pocket liability for unauthorized charges is $50. However, if your credit card number was stolen, but not the card, you will not be liable for the fraudulent charges.

Be Accountable

Far too often, people are lazy when it comes to managing their money. In fact, I have met a few who rely on their ATM receipt to tell them how much money is in their account. Wake up people! You are responsible for the health of your financial accounts. You have worked hard to earn that money, and you should work just as hard to protect it.

The simple act of reconciling your statements for a discrepancy is the easiest and fastest way to mitigate unauthorized transactions, but don’t wait 30 days to receive your statement by mail. Sign up for online access to your accounts. With online access, you will have the ability to review your account transactions from anywhere at any time. Many financial institutions offer free account alerts. A few examples of account alerts are minimum account balance or transactions over a specific dollar amount. When an alert is triggered, you will be notified by text message or email. Use the free alerts to help you monitor for fraudulent transactions. The tools are available; you just need to take the initiative to implement them. Otherwise, you too will end up like John.

To learn more about your rights, register for the Identity Fraud Institute’s workshop on August 22, 2017 from 10:00-11:00 a.m. Additional information can be found at https://www.hodges.edu/identity/events.aspx.