October EFTA News 2022

With the increase rise in electric funds transfers instead of paper checks, the Electronic Fund Transfer Act continues to grow more important. The EFTA’s purpose is to protect consumers and their electronic transfers. Recently, a couple of new developments have arisen.

Yesterday, the Consumer Finance Protection Board took action against Choice Money Transfer for alleged EFTA violations. “The CFPB found the company did not accurately disclose important prepayment information to remittance senders, such as money transfer fees, current exchange rates and the date the recipient would receive the funds.” In addition, and more interesting is this:

The company also had deficient recordkeeping practices that made it difficult for consumers to dispute erroneous transactions and receive a refund of certain fees. The CFPB is ordering Choice Money to pay a $950,000 penalty that will be deposited into the CFPB’s victims relief fund.

It is understandable that a deficient recordkeeping system could let to errors and mistakes — and has to be incredibly frustrating to consumers attempting to dispute inaccurate information.

In all, the CFPB found:

Provided inaccurate information to consumers about key transfer information: Choice Money repeatedly neglected to provide accurate fee information as required by law, including the current exchange rate and transfer fee costs added on to the remittance. The company also failed to accurately disclose the date by which funds would be available to the recipient.

Failed to provide refunds required by law: Choice Money was required by law to provide refunds for certain fees to consumers when “received by” dates were not met, but it repeatedly did not refund consumers for such delayed transfers.

Used inadequate disclosures: Choice Money did not use specific payment terms on their prepayment disclosures, used an improper size of font in their disclosures, and failed to provide disclosures in both English and Spanish.

Ignored consumer consent: The company did not abide by the rule’s consumer consent requirements, and included an improper waiver of consumer rights in its disclosures.

In a more broader story, Bankrate has an article on the broad protections of the EFTA. In general, it lists some of the more common scenarios when the EFTA may apply:

A debit card gets stolen and is used by the thief to make a purchase.

Your personal information is stolen and used to transfer money out of your account using Zelle.

A subscription service charges a monthly fee after you cancel the subscription.

Someone threatens you at an ATM and forces you to make a withdrawal.

The financial institution that hosts the account makes a bookkeeping error affecting you.

Essentially, anytime an unauthorized transfer is made from a consumer’s account, including debit card purchases, the EFTA may apply. This also often ties in with the FCRA.