Published: January 2014

Consumers suffer when their accounts are debited improperly

Millions of unauthorized payments are processed each year and that amount is increasing. Consumer Action pushes for stronger measures to stop illegal payments from being taken out of consumers’ bank accounts.

In a letter to NACHA-the Electronic Payment Association, Consumer Action and coalition advocates support the proposals to improve NACHA's ability to better protect consumers from electronic payments that are returned as unauthorized. The ultimate goal is to benefit all legitimate players in the automated payment system.

Although Regulation E and NACHA rules give consumers protection against unauthorized charges, many consumers do not know how to assert their rights. Even when consumers are eventually able to recover their funds, in the meantime they may struggle to pay bills and may incur bounced check fees, merchant return fees, and stop payment fees that are never reimbursed. The time to deal with an account that has been hijacked can also be tremendous. Misuse of the Automated Clearing House (ACH) transactions system also makes consumers wary of electronic payments generally and reluctant to engage in electronic commerce.

Consumers and banks alike are damaged by problematic ACH origination practices. Consumer Action and coalition advocates push for modest, carefully calibrated proposals as an important step toward reducing returns, including creating a system of economic incentives for originating banks and others to reduce returns.

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

Americans for Financial Reform | Consumer Action | the Consumer Federation of America | Consumers Union | the National Association of Consumer Advocates | the National Consumers League | U.S. PIRG

More Information

To download the coalition's full proposal click here.

For more information please visit NCLC's website.


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