Unauthorized Bank Withdrawals
If money was taken from your personal bank account without your authorization and your bank refused to return it, federal law may provide a remedy.
The Electronic Fund Transfer Act (EFTA) and Regulation E govern electronic transfers involving consumer bank accounts. The statute was enacted to protect individuals using debit cards, ATMs, online banking, mobile apps, and ACH transfers.
When a bank fails to properly investigate an unauthorized electronic transfer or refuses to follow federal dispute procedures, it may be liable for damages and attorney fees.
Todd Murray represents Minnesota consumers in serious unauthorized transfer and banking dispute cases under the EFTA.
What the Electronic Fund Transfer Act Covers
The EFTA applies to electronic transfers involving personal, family, or household accounts. It does not apply to business accounts.
Covered electronic transfers include:
Debit card purchases
ATM withdrawals
Online banking transfers
Mobile banking transactions
ACH and automatic bill payments
To qualify as an “unauthorized electronic fund transfer,” the transaction generally must:
Be initiated by someone other than the account holder
Be made without actual authority
Provide no benefit to the account holder
If you voluntarily gave someone access to your account and they used it, the transfer may not qualify as unauthorized. If you revoke someone’s authority, you should notify your bank and change access credentials immediately.
Paper checks, wire transfers between banks, business-to-business transfers, and certain internal transfers are generally not covered by the EFTA.
What Banks Are Required to Do
When you report an unauthorized electronic transfer, the bank must conduct a prompt investigation and provide you with a written explanation of its findings.
If the bank cannot complete its investigation quickly, it is often required to provisionally credit your account while it investigates.
The law does not require the bank to accept every dispute. It requires that the bank conduct a reasonable investigation and comply with defined timelines.
Timing and Consumer Responsibility
The EFTA includes timing rules that affect potential liability.
In general terms, if you notify the bank within two business days of discovering an unauthorized transfer, your potential liability may be limited to $50. If you notify the bank within 60 days of the statement showing the transfer, your liability may be capped at $500. If you wait beyond 60 days, your exposure may increase depending on the circumstances. Because timing can affect both liability and the bank’s obligations, prompt written notice is important.
Documentation also matters. Account statements, police reports, and identity theft affidavits can strengthen your position.
When a Bank May Be Violating the EFTA
Not every fraud dispute becomes a viable lawsuit. The strongest EFTA cases typically involve: clear unauthorized electronic transfers, timely notice to the bank, an inadequate investigation, and denial of the dispute without a reasonable basis.
Damages Available Under the EFTA
If a bank violates the EFTA, remedies may include actual damages, including out-of-pocket loss, statutory damages up to $1,000, and attorney fees and costs. In certain circumstances involving more serious violations, enhanced damages may be available.
Because the statute is fee-shifting, we handle viable EFTA cases on contingent fee arrangements.
The Bottom Line
Electronic banking is now the norm. Federal law requires banks to safeguard consumer funds and follow strict procedures when disputes arise.
If your bank refused to return money taken from your account and you believe the investigation was inadequate, early legal evaluation is important.
Ready to talk to a lawyer about an unauthorized bank withdrawal in Minnesota?
Schedule a free consult with attorney Todd Murray.
Since 2009, Todd has been helping Minnesotans combat illegal practices by consumer predators. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.