What Is — and Is Not — an Unauthorized Transfer Under the Electronic Fund Transfer Act
By: Robert J. Nahoum
When a withdrawal or payment shows up on your bank account that you don’t recognize, it can be alarming. Fortunately, the Electronic Fund Transfer Act (EFTA) protects consumers from unauthorized electronic fund transfers. But not every unexpected transaction qualifies as “unauthorized” under the law. Understanding the difference is critical when disputing an error with your bank.
What Counts as an Unauthorized Transfer
An unauthorized electronic fund transfer is any transaction from your account initiated by someone without your permission and without legal authority. The key is lack of consent and authority to act on your behalf.
Common examples include:
- A thief using your debit card or card number after it’s been stolen.
- A hacker initiating a transfer from your online banking account.
- A fraudster making withdrawals after obtaining your account or PIN information through phishing or similar scam.
- A third party accessing your account through a lost or stolen mobile device or payment app.
- Any transaction you never authorized and from which you received no benefit.
Under the EFTA, your liability for unauthorized transfers is limited if you promptly notify your bank—usually within 60 days of receiving your statement.
What Does Not Qualify as Unauthorized
There are several situations where a charge may feel “wrong,” but it’s not considered unauthorized under federal law. These include:
- Transactions by someone you gave access to—such as a family member or employee—unless you specifically revoked permission before the transaction occurred.
- Errors made by merchants, such as duplicate or incorrect billing amounts, which are considered billing errors, not unauthorized transfers.
- Preauthorized automatic payments (like streaming services or gym memberships) that you forgot to cancel.
- Disputes over the quality or delivery of goods or services; these fall under contract law or the Fair Credit Billing Act, not the EFTA.
- Transfers performed by the bank itself to collect fees or correct account balances.
Banks will often deny reimbursement when evidence shows that access was voluntarily granted or that the cardholder negligently shared login information. Still, consumers can often argue negligence was not “gross negligence”—a key distinction under Regulation E.
What to Do If You Spot an Unauthorized Charge
If you believe a transaction is unauthorized:
- Notify your bank immediately—preferably in writing.
- Follow up within 10 business days if the issue isn’t resolved.
- Keep copies of all correspondence and transaction records.
- Contact a consumer protection attorney if the bank denies your claim or fails to investigate properly.
The protections of the EFTA can make the difference between recovering your money and absorbing a financial loss. Taking timely action—and knowing what qualifies as unauthorized—ensures your rights are preserved.
If you need help recovering money lost to a bank account hack, contact us today to see what we can do for you. With offices located in Brooklyn and the Hudson Valey, the Law Offices of Robert J. Nahoum represents consumers in cases throughout the Tristate area including New Jersey.
The Law Offices of Robert J. Nahoum, P.C
(845) 232-0202
www.nahoumlaw.com
info@nahoumlaw.com