Customer Rights
August 28, 2009 – 1:39 amAs part of its role in supervising and regulating the industry, the Fed has always been concerned with defining and protecting consumers’ rights. Following are some of the most significant acts that have impacted business banking.
Electronic Funds Transfer Act of 1978 (EFTA). Rapid developments in technology and the increased use of electronic services such as ACH and ATMs led to congressional mandates regarding usage. This act defines the rights and responsibilities of individuals with respect to electronic funds transfers (including debit cards), with the exception of wire transfers. It covers direct deposits such as payroll, Social Security benefits, and preauthorized payments, for example, automatic payment of utility bills. Individuals have the right to stop a preauthorized payment as long as the financial institution is given three days notice. The liability on cards is limited as long as the card is reported lost or stolen.
An amendment in 1996, the electronic funds transfer (EFT) provision of the Debt Collection Improvement Act, required that most federal payments, with the exception of tax refunds, be made by EFT in lieu of paper checks. This resulted in banks developing electronic services for payment of corporate taxes; and NACHA launched the TXP message type specifically for ACH tax payments (see Appendix B).
The provisions of this act are incorporated in Federal Reserve Regulation E, which was revised in 2001 to require the disclosure of certain fees associated with automated teller machine (ATM) transactions. It was further revised in 2002 to cover electronic check conversion and authorization of recurring debits.
Expedited Funds Availability Act 1988 (EFAA). In an attempt to curb some of the abuses that were occurring in the banking industry, Congress passed EFAA to reduce the time a financial institution can hold a check before making the funds available to a depositor. The EFAA established new standards for expedited funds availability, as well as return procedures for payable through drafts and checks. The provisions of this act are incorporated into Regulation CC.
Electronic Signatures in Global and National Commerce Act 2000. Recognizing the growing use of the Internet, e-commerce, and cross-border transactions, this act gave digital signatures the same authority as ink signatures. The act also provided for the enforceability of electronic transactions.
Taken From : Essentials of Managing Corporate Cash
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