Electronic payment is becoming a commonly used payment method in a wide variety of transactions. Many people believe that the electronic payment option offers more convenience, safety, and efficiency over paper-based methods. Electronic payment may be used in such transactions as, among others, banking, utility bill payment, tax payment, and consumer purchases.
Electronic payments are generally subject to the same contract laws as more traditional payment methods. In the case of mistakes due to technology failure, the entity being paid usually has their own policies applicable to refunds. The federal Electronic Fund Transfer Act covers some electronic consumer transactions. The Fair Credit Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA) establish procedures for resolving mistakes on credit billing and electronic fund transfer account statements, including:
- charges or electronic fund transfers that you — or anyone you have authorized to use your account — have not made;
- charges or electronic fund transfers that are incorrectly identified or show the wrong amount or date;
- computation or similar errors;
- failure to reflect payments, credits, or electronic fund transfers properly;
- not mailing or delivering credit billing statements to your current address, as long as that address was received by the creditor in writing at least 20 days before the billing period ended;
- charges or electronic fund transfers for which you request an explanation or documentation, due to a possible error.
The FCBA generally applies only to "open end" credit accounts — credit cards, revolving charge accounts (such as department store accounts), and overdraft checking accounts. It does not apply to loans or credit sales that are paid according to a fixed schedule until the entire amount is paid back, such as an automobile loan. The EFTA applies to electronic fund transfers, such as those involving automatic teller machines (ATMs), point-of-sale debit transactions, and other electronic banking transactions.
For transactions covered by EFTA, there are certain rules applicable to erroneous or unauthorized fund transfers. The rules require the payor to be provided with periodic statements and the payor has a duty to report errors within 60 days of the statement containig the error. Financial institutions must investigate the claim and if funds are due to the payor, they must be returned within 10 days, along with any applicable interest.