The Electronic Funds Transfer Act and the Federal Credit Billing Act were enacted in the 1970s and 1980s to provide individual consumer rights to consumers who paid with electronic funds or credit cards. While the laws were enacted well before the advent of online shopping, they have important implications for individual consumer purchases made on the internet. Many consumers pay for their internet purchases with credit cards and those consumers are protected by the Fair Credit Billing Act. Consumers who chose to pay for their transactions with their debit cards or ATM cards are protected by the Electronic Funds Transfer Act.
If You Pay By Credit Card
Many people are concerned about having their credit card number stolen or misused if they use their credit card to pay for online purchases. While a stolen credit card can be a big headache, it is important for online customers to know that the Federal Credit Billing Act includes protection for the online consumer. If a credit card number is stolen then the credit card holder has no liability for the unauthorized purchases made on that card (if the card itself is stolen then the customer is responsible for the first $50 of unauthorized purchases). The law also protects the credit card user against billing errors. However, it is important for the consumer to remember that he or she has an obligation to notify the credit card company as soon as possible and no later than 60 days after receipt of the first bill containing the error or unauthorized charges. The report should be made in writing to the address provided by the credit card company.
IF You Pay By Debit (ATM) Card
Consumers who use debit cards that are connected to their bank accounts face different liabilities for unauthorized use than do consumers who use credit cards. The Electronic Funds Transfer Act provides that a customer must report unauthorized use within 2 days of learning of it if the liability for the unauthorized charges is to be limited to $50. If, instead, the consumer waits and reports the problem within 60 days then the potential liability is usually $500 and if the consumer waits more than 60 days then the potential liability may be unlimited.
Minimize Your Risk
There are some ways to minimize your risk while you shop from the comfort of your home or office. You can shop on secure websites and patronize online businesses with good business reputations. You might want to research a company with the Better Business Bureau before you provide your personal financial information. Some consumers prefer to do business with a company whom they have had a good relationship with in the past in a traditional brick and mortar store. Furthermore, you should carefully review the website’s return policies before placing your order and always print out a copy of your order form for your records.
Every year millions of Americans shop online without any problems. However, the best way to protect your own transactions is to minimize your risk up by following the recommendations described above, by keeping a careful eye on your monthly statement for any errors and knowing your rights as a an online consumer.
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.