§1693h — Title 15 Commerce and Trade | U.S. Code

Summary

Banks and other financial companies must pay customers for harm caused by certain mistakes with electronic transfers. That includes when the company does not send the correct amount or does not send money on time after the customer properly asks, when the company fails to credit a deposit that would have covered a transfer and that causes insufficient funds, and when the company does not stop a preauthorized payment after the customer asks. The company does not have to pay if the failure happened for allowed reasons like not enough money in the account, a legal hold, exceeding a credit limit, an ATM running out of cash, or other rules the Bureau sets. The company is also not responsible for events beyond its control if it used reasonable care, or for a tech problem the customer already knew about. If a nonintentional, genuine mistake happened despite reasonable procedures, the company must pay the actual losses the customer proves. If an ATM operator posted a required notice and someone else later removed or damaged that notice, the operator is not responsible.

Title 15, §1693h

Commerce and Trade — Source: USLM XML via OLRC

(a)Subject to subsections (b) and (c), a financial institution shall be liable to a consumer for all damages proximately caused by—

(1)the financial institution’s failure to make an electronic fund transfer, in accordance with the terms and conditions of an account, in the correct amount or in a timely manner when properly instructed to do so by the consumer, except where—

(A)the consumer’s account has insufficient funds;

(B)the funds are subject to legal process or other encumbrance restricting such transfer;

(C)such transfer would exceed an established credit limit;

(D)an electronic terminal has insufficient cash to complete the transaction; or

(E)as otherwise provided in regulations of the Bureau;

(2)the financial institution’s failure to make an electronic fund transfer due to insufficient funds when the financal 11 So in original. Probably should be “financial”. institution failed to credit, in accordance with the terms and conditions of an account, a deposit of funds to the consumer’s account which would have provided sufficient funds to make the transfer, and

(3)the financial institution’s failure to stop payment of a preauthorized transfer from a consumer’s account when instructed to do so in accordance with the terms and conditions of the account.

(b)A financial institution shall not be liable under subsection (a)(1) or (2) if the financial institution shows by a preponderance of the evidence that its action or failure to act resulted from—

(1)an act of God or other circumstance beyond its control, that it exercised reasonable care to prevent such an occurrence, and that it exercised such diligence as the circumstances required; or

(2)a technical malfunction which was known to the consumer at the time he attempted to initiate an electronic fund transfer or, in the case of a preauthorized transfer, at the time such transfer should have occurred.

(c)In the case of a failure described in subsection (a) which was not intentional and which resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid any such error, the financial institution shall be liable for actual damages proved.

(d)If the notice required to be posted pursuant to section 1693b(d)(3)(B)(i) of this title by an automated teller machine operator has been posted by such operator in compliance with such section and the notice is subsequently removed, damaged, or altered by any person other than the operator of the automated teller machine, the operator shall have no liability under this section for failure to comply with section 1693b(d)(3)(B)(i) of this title.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2010—Subsec. (a)(1)(E). Pub. L. 111–203 substituted “Bureau” for “Board”. 1999—Subsec. (d). Pub. L. 106–102 added subsec. (d).

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

§1693h Liability of Financial Institutions