Skip NavigationSmall Claims Court: Consumer and Substantive Laws


§6.08 Electronic Fund Transfers—Breach of Other Duties

Lesson 6:
Checks & EFTs

A financial institution is liable to a consumer for all damages proximately caused by its failure to [15 USC §1693h(a)]:

  • Make an EFT in the correct amount or timely manner (assuming the account has sufficient funds);
  • Make an EFT due to insufficient funds when the financial institution failed to credit a deposit of funds that would have provided sufficient funds to make the transfer; or
  • Stop payment of a preauthorized transfer from a consumer’s account when instructed to do so.

A financial institution is not liable for failing to perform these duties if its action (or inaction) resulted from an act of God or other circumstances beyond its control, it exercised reasonable care to prevent such an occurrence, and it exercised such diligence as the circumstances required. Furthermore, it is not liable if it shows that its actions resulted from a technical malfunction that was known to the consumer at the time he or she attempted to initiate an EFT or, in the case of a preauthorized transfer, at the time such transfer should have occurred. [15 USC §1693h(b).]

A financial institution is liable only for actual damages if the failure was not intentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. [15 USC §1693h(c).]

In addition to actual damages, any person who fails to comply with any provision of the Act, except for an unintentional violation resulting from a bona fide error, is liable to the consumer for civil penalties of an amount not less than $100 nor greater than $1000, plus attorney fees and costs. [15 USC §1693m(a), (c).] In the case of certain violations of the Act’s error correction procedures, a consumer is also entitled to treble damages. [See §6.06.]

    back        Back         page 67 of 100         Next        next