Russ Thompson Managing Partner Thompson Consumer Law Group
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Banking, Loan, and Auto Pay Violations
Banking, Loan, and Auto Pay Violations
Consumer protection statutes like the Truth in Lending Act (“TILA”) and the Electronic Funds Transfer Act (“EFTA”) exist to protect consumers dealing with certain organizations, such as banks and credit unions, during certain transactions, like taking loans and paying bills by electronic fund transfer (also known as an ACH or Automated Clearing House payment).
Banks and other lenders must also clearly disclose the terms and details of any loan before the loan is finalized pursuant to TILA. Lenders must also disclose all of the terms of a loan in understandable language before finalizing the transaction. If the lender fails to disclose the appropriate information, or if the lender fails to abide by the terms of the loan, consumers can take legal action. Catching the problems early will allow you to resolve the issue with as little hassle as possible. Violations of consumer protection laws can often be remedied easily with the benefit of legal counsel.
The EFTA regulates electronic payments such as debit cards, checks by phone, automatic bill pays, ATM and debit card overdraft fees, and gift cards. Claims under the Electronic Funds Transfer Act may arise any time money is electronically credited to or debited from a consumer’s checking, savings, or other type of deposit account. Common transactions where EFTA violations occur include:
- Bills paid online or over the phone with a check or debit card, especially where these accounts are paid on a continuing basis and/or where the monthly amount varies, including your cable company, cell phone provider, insurance company, or gym;
- Signing up for a free offer that will be paid on a monthly basis after the free period, for example, a service like Netflix or SiriusXM radio;
- Moneys paid to a debt collector or credit card company over the phone with information from a check;
- A check used to pay for merchandise or a bill where the information from your check is used to electronically take the money from your account rather than with the check itself;
- Payday loans where your repayment is automatically taken from your bank account;
- Mortgage Loans or car payments paid over the phone with information from a check;
- Bank charges when debiting or crediting money to your account;
- Fees charged for withdrawing money at an ATM without being told about the fee; and,
- Overdraft fees from your bank when you use your debit card or the ATM machine.
Anytime you take out a consumer loan:
Anytime you take out a consumer loan—including an auto loan, pay day loan, title loan, line of credit, refinancing, and anytime you enter into an automatic pay agreement over a loan or any other bill, we can evaluate your TILA and EFTA rights. EFTA and TILA may allow a consumer to recover the money lost because of a violation and statutory penalties for violations ranging between $100 to $2,000, plus actual damages and attorneys’ fees. To do so, please also send us any of the below information you have (don’t worry about what you don’t have, just send what you do):
- Copies of the original credit agreement, including all attachments and other documents given at the time you sign(ed) the credit agreement;
- Copies of any electronic funds transfer authorizations you execut(ed) at the time you sign(ed) the credit agreement;
- If you were told you had to sign up for automatic payments, a detailed statement (from you and anyone else present such as a spouse or other friend/family member) explaining who told you this and when; and,
- If you were told you had to purchase any service or item to be approved for your loan, or had to pay the loan electronically to qualify, a detailed statement (from you and anyone else present such as a spouse or other friend/family member) explaining who told you this and when.
NOTE: The limitations period to evaluate a loan or electronic bill pay arrangement with regard to your TILA/EFTA rights is usually one year from the date of the transaction, so please send the TILA/EFTA Information at the time it occurs.