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Bank error in your favor

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"Just because they're handling your money doesn't mean they are rocket scientists. Banks put a lot of pressure on their staff in a sweatshop kind of atmosphere," says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group, a consumer advocacy group.

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Sometimes discussions with the bank reach a stalemate and the only thing to do is go straight to the regulatory agency to resolve the dispute. Let the bank know that you know they have a state or federal regulator, and that you will be complaining, says Mierzwinski.

Statute of limitations for errors
When the bank happens to take $120 out of your account when you only got $60 from the ATM, you have a window of 60 days to dispute the transaction. After that -- too bad, so sad and don't bother complaining to the bank. A federal law known as the Electronic Funds Transfer Act limits the period in which you can notify your bank of a mistake in your account to 60 days from the date the statement containing the error was sent.

If your debit card gets lost or stolen, better act quickly because you have two measly business days to completely limit your liability to a cap of $50. Check transactions are governed by a separate set of rules, the Uniform Commercial Code and the Check 21 Act in the case of substitute checks, which also limit the time you have to dispute a transaction -- except in the case of electronic check conversion wherein you're once again covered by the EFTA.

How long does a bank have to take back money they mistakenly put into your account? It varies by state, but is measured in years, not days and they have the threat of jail to back up their actions.

"The EFTA is a very weak law, and a lot of the time these situations are covered by it. But it doesn't, generally, do much for the consumer," says Mierzwinski. "Banks don't have a soul. Increasingly, all they're looking for is ways to make money."

What's a consumer to do?
So, what should you do if you find yourself in temporary possession of your bank's money? "If it is a very large amount of money, you would be naive to think that it's your money. And, if it's not your money, they're going to want it back," says Mierzwinksi. "It's another story if it's a small amount. If you do spend it by mistake, I would insist that the bank give you a reasonable amount of time to pay it off. Or, they should write it off entirely as an act of good faith."

When you notice the error, Mierzwinksi recommends alerting the bank. Don't speak with the first teller you get to or the person answering the phone on the customer service line. Go to a supervisor.

Linda Sherry, director of national priorities for Consumer Action, advises that while speaking with someone at the bank document everything and get a specific time frame. "Ask when they expect the investigation will be complete and write down the name of the person you speak with, the time and date."

"If the date given for the end of the investigation arrives and the money is still in the account and you have to follow up, you are getting on much firmer ground for keeping the money. You do your duty by making the report.

"You can't take the cash out and go fling it at a teller," Sherry says.

"I've spoken with people who have done everything they can to give the money back but it's very difficult. You have to leave the money in the account so they can figure out how it got there in the first place."

Bankrate.com's corrections policy-- Posted: Nov. 3, 2006
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