15 U.S.C. § 1693g — Consumer liability

Page 1651 TITLE 15—COMMERCE AND TRADE § 1693g 1 So in original. Probably should be ‘‘means’’. 2 See References in Text note below. (6) a consumer’s request for additional infor- mation or clarification concerning an elec- tronic fund transfer or any documentation re- quired by this subchapter; or (7) any other error described in regulations of the Bureau. (Pub. L. 90–321, title IX, § 908, as added Pub. L. 95–630, title XX, § 2001, Nov. 10, 1978, 92 Stat. 3733; amended Pub. L. 111–203, title X, § 1084(1), July 21, 2010, 124 Stat. 2081.) Editorial Notes REFERENCES IN TEXT Section 1693m of this title, referred to in subsec. (e), was in the original a reference to section 915 of Pub. L. 90–321, and was translated as meaning section 916 of Pub. L. 90–321 to reflect the probable intent of Congress and the renumbering of section 915 of Pub. L. 90–321 as section 916 by Pub. L. 111–24, title IV, § 401(1), May 22, 2009, 123 Stat. 1751. AMENDMENTS 2010—Subsec. (f)(7). Pub. L. 111–203 substituted ‘‘Bu- reau’’ for ‘‘Board’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated 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. § 1693g. Consumer liability (a) Unauthorized electronic fund transfers; limit A consumer shall be liable for any unauthor- ized electronic fund transfer involving the ac- count of such consumer only if the card or other means of access utilized for such transfer was an accepted card or other meanas 1 of access and if the issuer of such card, code, or other means of access has provided a means whereby the user of such card, code, or other means of access can be identified as the person authorized to use it, such as by signature, photograph, or fingerprint or by electronic or mechanical confirmation. In no event, however, shall a consumer’s liability for an unauthorized transfer exceed the lesser of— (1) $50; or (2) the amount of money or value of property or services obtained in such unauthorized elec- tronic fund transfer prior to the time the fi- nancial institution is notified of, or otherwise becomes aware of, circumstances which lead to the reasonable belief that an unauthorized electronic fund transfer involving the con- sumer’s account has been or may be effected. Notice under this paragraph is sufficient when such steps have been taken as may be reason- ably required in the ordinary course of busi- ness to provide the financial institution with the pertinent information, whether or not any particular officer, employee, or agent of the fi- nancial institution does in fact receive such information. Notwithstanding the foregoing, reimbursement need not be made to the consumer for losses the financial institution establishes would not have occurred but for the failure of the consumer to report within sixty days of transmittal of the statement (or in extenuating circumstances such as extended travel or hospitalization, with- in a reasonable time under the circumstances) any unauthorized electronic fund transfer or ac- count error which appears on the periodic state- ment provided to the consumer under section 1693d of this title. In addition, reimbursement need not be made to the consumer for losses which the financial institution establishes would not have occurred but for the failure of the consumer to report any loss or theft of a card or other means of access within two busi- ness days after the consumer learns of the loss or theft (or in extenuating circumstances such as extended travel or hospitalization, within a longer period which is reasonable under the cir- cumstances), but the consumer’s liability under this subsection in any such case may not exceed a total of $500, or the amount of unauthorized electronic fund transfers which occur following the close of two business days (or such longer period) after the consumer learns of the loss or theft but prior to notice to the financial institu- tion under this subsection, whichever is less. (b) Burden of proof In any action which involves a consumer’s li- ability for an unauthorized electronic fund transfer, the burden of proof is upon the finan- cial institution to show that the electronic fund transfer was authorized or, if the electronic fund transfer was unauthorized, then the burden of proof is upon the financial institution to estab- lish that the conditions of liability set forth in subsection (a) have been met, and, if the trans- fer was initiated after the effective date of sec- tion 1693c of this title, that the disclosures re- quired to be made to the consumer under section 1693c(a)(1) and (2) of this title were in fact made in accordance with such section. (c) Determination of limitation on liability In the event of a transaction which involves both an unauthorized electronic fund transfer and an extension of credit as defined in section 1602(e) 2 of this title pursuant to an agreement between the consumer and the financial institu- tion to extend such credit to the consumer in the event the consumer’s account is overdrawn, the limitation on the consumer’s liability for such transaction shall be determined solely in accordance with this section. (d) Restriction on liability Nothing in this section imposes liability upon a consumer for an unauthorized electronic fund transfer in excess of his liability for such a transfer under other applicable law or under any agreement with the consumer’s financial insti- tution. (e) Scope of liability Except as provided in this section, a consumer incurs no liability from an unauthorized elec- tronic fund transfer. (Pub. L. 90–321, title IX, § 909, as added Pub. L. 95–630, title XX, § 2001, Nov. 10, 1978, 92 Stat. 3734.) Page 1652 TITLE 15—COMMERCE AND TRADE § 1693h 1 So in original. Probably should be ‘‘financial’’. Editorial Notes REFERENCES IN TEXT Section 1602(e) of this title, referred to in subsec. (c), was redesignated section 1602(f) of this title by Pub. L. 111–203, title X, § 1100A(1)(A), July 21, 2010, 124 Stat. 2107. § 1693h. Liability of financial institutions (a) Action or failure to act proximately causing damages 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 accord- ance with the terms and conditions of an ac- count, 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 insuffi- cient funds; (B) the funds are subject to legal process or other encumbrance restricting such trans- fer; (C) such transfer would exceed an estab- lished 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 insuf- ficient funds when the financal 1 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) Acts of God and technical malfunctions A financial institution shall not be liable under subsection (a)(1) or (2) if the financial in- stitution shows by a preponderance of the evi- dence that its action or failure to act resulted from— (1) an act of God or other circumstance be- yond 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 at- tempted to initiate an electronic fund transfer or, in the case of a preauthorized transfer, at the time such transfer should have occurred. (c) Intent 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) Exception for damaged notices If the notice required to be posted pursuant to section 1693b(d)(3)(B)(i) of this title by an auto- mated teller machine operator has been posted by such operator in compliance with such sec- tion 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. (Pub. L. 90–321, title IX, § 910, as added Pub. L. 95–630, title XX, § 2001, Nov. 10, 1978, 92 Stat. 3735; amended Pub. L. 106–102, title VII, § 705, Nov. 12, 1999, 113 Stat. 1465; Pub. L. 111–203, title X, § 1084(1), July 21, 2010, 124 Stat. 2081.) 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 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated 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. § 1693i. Issuance of cards or other means of ac- cess (a) Prohibition; proper issuance No person may issue to a consumer any card, code, or other means of access to such con- sumer’s account for the purpose of initiating an electronic fund transfer other than— (1) in response to a request or application therefor; or (2) as a renewal of, or in substitution for, an accepted card, code, or other means of access, whether issued by the initial issuer or a suc- cessor. (b) Exceptions Notwithstanding the provisions of subsection (a), a person may distribute to a consumer on an unsolicited basis a card, code, or other means of access for use in initiating an electronic fund transfer from such consumer’s account, if— (1) such card, code, or other means of access is not validated; (2) such distribution is accompanied by a complete disclosure, in accordance with sec- tion 1693c of this title, of the consumer’s rights and liabilities which will apply if such card, code, or other means of access is vali- dated; (3) such distribution is accompanied by a clear explanation, in accordance with regula- tions of the Bureau, that such card, code, or other means of access is not validated and how the consumer may dispose of such code, card, or other means of access if validation is not desired; and (4) such card, code, or other means of access is validated only in response to a request or application from the consumer, upon verification of the consumer’s identity. (c) Validation For the purpose of subsection (b), a card, code, or other means of access is validated when it