Answer:
It's likely that the customer's call was too late to stop the law firm from tapping the account; however, you can avoid the issue. The definition of "unauthorized electronic fund transfer" is the key: "Unauthorized electronic fund transfer means an electronic fund transfer from a consumer's account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit."The transfer is credited to the consumer's account with the collection firm, so the consumer receives the benefit of the transfer. On a going forward basis, determine whether your customer intends that no further transfers be made by the law firm. If that is the case, tell your customer that you will block further debits by the law firm, but that he must notify the law firm in writing of his revocation of his prior authorization, and provide you a copy of that written revocation within 14 days for you to make the block permanent (see the Official Staff Interpretations to Reg. E section 205.10(c)). Both MasterCard and Visa have procedures you can use to block the payments.
First published on BankersOnline.com 6/29/09
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