2 Important Consumer Protection Laws to Know: EFTA and TILA

If you are like most Americans, you probably prefer to use online banking, ATM cash withdrawals, and mobile payment apps rather than making a trip to your local bank. According to a study by Fortunly, 89% of Americans manage their bank accounts through mobile banking and 94% of those account holders access their accounts online at least once a month. With so many people using digital banking and money transfers and taking out loans, it’s important to have consumer protection laws that address these situations.

It’s also important for consumers to understand their rights and responsibilities under these laws. 

One of the Most Important Consumer Protection Laws: the EFTA 

During electronic transactions, mistakes can happen, computer systems may be hacked, and identity thieves might try to steal your information. Prior US banking laws protected banks’ rights and obligations while consumers were left unguided and unprotected. Eventually, the Electronic Fund Transfer Act was created to protect consumers who use electronic fund transfers.  

As technology continues to expand, this Act has become one of the most important consumer protection laws to understand. Let’s take a closer look… 

The Electronic Fund Transfer Act (EFTA) 

This statute applies to electronic banking, digital bill payments, debit card or ATM transactions, and peer-to-peer cash transfers. The EFTA creates a process for consumers to dispute unauthorized electronic transfers and requires that financial institutions create and follow certain procedures upon receiving a consumer dispute. 

Who is Covered? 

Consumers who use online banking, debit and ATM cards, and digital money transfers are covered by the EFTA. All financial institutions that allow electronic fund transfers and fund transfer service providers (such as mobile payment apps) are bound as well.  

Consumer Rights and Responsibilities 

The sooner you notify your bank or other financial institution about an unauthorized transaction, the more protection you have. Once you notify your bank, it must investigate the situation, report its findings, and disclose the information it relied upon if it rejects your dispute.  

If you find an unauthorized transfer, depending on how quickly you report it, you may receive a full or partial refund of the money taken. If you wait too long to notify the bank, you may lose the entire amount taken from your account and possibly more until you finally give notice. 

Possible EFTA Violations 

Once you notify your financial institution, it may violate the EFTA by failing to: 

  • Reasonably investigate, 
  • Report its investigation findings, 
  • Supply the information it relied upon to reject your dispute, 
  • Refund your money according to the Act, or 
  • Protect your account by allowing more unauthorized transfers after being advised of the problem.  

Remedies Allowed by the EFTA 

If you can prove an EFTA violation you can request:  

  • Actual damages which include any out-of-pocket losses, emotional distress, and more,  
  • Statutory damages ranging from $100 to $1,000,  
  • Treble Damages (a form of punitive damages calculated at three times your actual damages allowed in some circumstances), and  
  • Payment of your attorney’s fees and costs. 

Deadline to File an EFTA Lawsuit 

Legal action brought under the EFTA is subject to a one-year statute of limitations. This is the window of opportunity imposed by the Act for consumers to bring legal action. Keep in mind, the EFTA is complicated, and you should consult with an experienced attorney to ensure you don’t miss your filing deadline. 

For more detailed information about the EFTA, be sure to read this Consumer’s Guide to the Electronic Funds Transfer Act. If you discover unauthorized electronic transfers in your account and your bank won’t help, reach out to the Financial Justice Initiative as soon as possible. 

To Protect Borrowers and Credit Card Users, Congress Passed More Consumer Protection Laws Including the TILA 

This law was created to protect consumers from dishonest and unfair credit billing and credit card tactics. It also requires lenders to disclose specific loan information so consumers can compare their loan options. 

The Truth in Lending Act (TILA) 

As a consumer, you’ve probably faced a variety of loan and credit situations. Maybe you have a home mortgage or a vehicle loan, or perhaps you sat through a timeshare presentation for a vacation property. Seventy percent of Americans have at least one credit card, and many people carry several cards. Unfavorable loan or credit terms negatively affect consumers’ ability to successfully pay debt and unscrupulous lenders may try to take advantage of innocent borrowers.  

Consumers may feel pressured into a transaction they later regret and want to cancel, or they may realize the loan terms were changed after signing on the bottom line. The Truth in Lending Act is one of the strongest consumer protection laws in these situations. Among TILA’s provisions, the greatest consumer protections include:  

  1. A credit card company cannot bill you for unauthorized charges if you dispute a charge, and  
  2. Creditors and lenders must disclose accurate loan details including:  
  3. the total amount financed,  
  4. the Annual Percentage Rate (APR) of interest,  
  5. all loan costs,  
  6. finance charges, and  
  7. the total amount to be paid. 

Who is Covered? 

TILA covers financial institutions that offer loans such as mortgages, car financing, product payment plans, cellular phone packages, and other installment payment plans and the consumers who accept these loans. 

Consumer Rights and Responsibilities 

Consumers have the right to know all loan terms, how much they will pay in interest, whether the interest rate or other terms can change during the loan, and how much the financing will ultimately cost them. Some loans are subject to a Right of Rescission, also known as a Cooling-Off period, that allows the consumer to cancel the loan within a certain period if they change their mind. 

Possible TILA Violations 

A lender or creditor can violate the TILA requirements by:  

  • Not disclosing the loan or credit terms,  
  • Changing the terms during the contract without authority or notice,  
  • Hiding charges or fees from the consumer,  
  • Trying to recover fees that were not originally disclosed or agreed upon, and  
  • Other actions that mislead a borrower. 

Remedies Allowed by the TILA 

If you can prove a TILA violation you may be eligible to recover:  

  • Actual damages 
  • Up to $5,000 in statutory damages, and  
  • Payment of your attorney’s fees and costs. 

Deadline to File a TILA Lawsuit 

The Truth in Lending Act has a one-year statute of limitations to file a lawsuit. Like all federal laws, calculating the start and end of the one-year window is complicated and best left to an experienced consumer protection attorney to determine. 

Consumer Protection Laws are Too Complicated to Face Alone  

We know consumers don’t have the time, money, or resources to challenge big companies that violate consumer protection laws. The Financial Justice Initiative was formed by two consumer protection law firms with a passion for protecting consumers and holding banks, loan companies, and creditors accountable.  

We accept many cases on a contingency basis and request our fees and costs from the businesses that violate these laws. Schedule a free case consultation by calling (206) 350-2357 or completing this simple form today.