ACH Dispute Laws

By Theresa Custodio
Banking laws offer procedures for consumers to resolve disputes.

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Your bank uses the Automated Clearing House (ACH) to transfer money to and from your checking and other accounts. These credits and debits are possible without physical money changing hands through a computerized system known as Electronic Funds Transfer (EFT). The federal government regulates the ACH and provides a system for consumers to dispute and correct ETF errors through the Electronic Fund Transfer Act.

Qualified Errors

Under the act, you may dispute electronic transfers of money you have not previously authorized through the bank. An incorrect amount of money debited or credited to your account can also be disputed. In addition, you may challenge any ACH transactions that are missing from a bank statement and other bookkeeping mistakes made by the financial institution. Receiving an incorrect amount of money via an automated teller machine is also disputable under the law. Mistakes in an account balance inquiry or information related to taxes and other purposes are not errors covered by this law.

General Procedure

Your bank is required to follow the dispute procedure under the Electronic Fund Transfer Act upon your oral or written notification of a possible error. Consumers must notify a bank of an ACH error within 60 days after the bank statement, or other documentation, containing the mistake is issued. If you notify your bank in person of the dispute, the institution can require you to provide written confirmation of the error within 10 business days. The bank must provide you with an address to send the documentation at the time you are notified of the need for confirmation in writing.

You may request further documentation from the bank after your initial complaint to determine if an error has occurred. Once you receive this information, you have 60 days to dispute the information contained in the requested documents. Upon receiving a notice of error, the bank must investigate and decide the outcome of your dispute within 10 business days. The result of the bank's analysis must be reported to you within three business days after the investigation is completed. If an error has occurred, the bank must correct the mistake within one business day.

Special Procedures

Under certain circumstances, the amount of time a bank is allowed to determine if errors occurred during an electronic transfer of funds can vary. Your bank can extend the normal ten day period for dispute investigation to 45 days if the amount in question is temporarily credited to the account. This credit must occur within 10 days of your error notice to the bank.

The bank may withhold a maximum of $50 of the disputed amount should it reasonably determine the ETF was unauthorized before a full investigation is complete. Your bank is allowed to extend the investigation period without offering any temporary credit to the account if you don't provide written notice of the error within 10 business days of its request.

About the Author

Theresa Custodio is a Michigan-certified nurseryman with over 10 years experience. She has spent over five years working for the State of Michigan's Department of Environmental Quality writing permits and violation notices, which are published for public record. She has a Bachelor of Science degree from Eastern Michigan University with a major in biology and a minor in conservation and resource use.

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