The Electronic Fund Transfer Act was passed in 1978 to establish the rights and liabilities of consumers as well as the responsibilities of all participants in electronic funds transfer activities. Any company that wants to take recurring electronic withdrawals out of a customer’s checking account must get the customer’s signed, written permission, or a similar authentication. EFTs are governed by the Electronic Fund Transfer Act, which regulates automated clearinghouse (“ACH”) systems and telephone billing payment plans.
It’s been determined that an audio recording of verbal consent is arguably not sufficient for “similarly authentication.” One-time EFTs, where the customer authorizes a funds transfer over the phone, are less intrusive, generally, than a recurring monthly EFT (but, the company charging your account must tell you that the transaction will be processed as an EFT); in this case, a customer’s verbal consent over the phone is okay. But, if the company wants to take monthly electronic debits from your account, they must obtain your signed, written permission, and this includes debt collection agencies. Further notice must be given if the EFT amount changes month to month. Recurring credit card payments are not governed by the same legal statues; monthly charges can be made without your explicit written permission. For regular credit card withdrawals, audio recordings of authorization, with appropriate disclosures, is legal.
Paper checks over the phone are slightly different; collection agencies can create what’s called a pre-authorized demand draft (PADD) over the phone, with the customer’s consent. But the debt collector has to be able to prove this authorization; it’s a good idea to record your calls with debt collectors. Collection agencies and other companies can and are being held liable for violating the Electronic Fund Transfer Act, facing actual damages from $100 to $1000, along with reasonable attorney fees and costs. Class action lawsuits, like the one recently filed, allow for total recovery of $500,000 or 1 per centum of the net worth of the defendant, whichever is lesser.
If a collection agency has harassed you, you may be entitled to money damages up to $1,000.00, based on the FDCPA, which has been around for almost 35 years. The FDCPA is a federal law that applies to every state. In other words, everyone is protected by the FDCPA. The FDCPA is essentially a laundry list of what debt collectors can and cannot do while collecting a debt, as well as things debt collectors must do while collecting a debt. Plus, the FDCPA has a fee-shift provision. This means, the collection agency pays your attorney’s fees and costs. Founding attorney, Michael Agruss, has settled over 1,500 debt collection harassment cases. We want to help you, too.