What is Electronic Bankidng Mini (1)

8/11/2019 What is Electronic Bankidng Mini (1)

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Indiana Department of Financial Institutions

HAT IS ELECTRONIC

BANKING?

A mini-lesson for:

secondary school teachers

adult and community educators

students and consumers

This mini-lesson includes learning objectives background information discussion questions activities a


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This mini lesson includes learning objectives background information discussion questions activities a

lectronic banking, also known as electronic funds transfer #!T$, is simply the use of electronic meansto transfer funds directly from one account to another, rather than by check or cash. %ou can useelectronic funds transfer to:

have your paycheck deposited directly into your bank or credit union checking account.

withdraw money from your checking account from an "T& machine with a personal identificationnumber #'()$, at your convenience, day or night.

instruct your bank or credit union to automatically pay certain monthly bills from your account,such as your auto loan or your mortgage payment.

have the bank or credit union transfer funds each month from your checking account to your

mutual fund account.

have your government social security benefits check or your ta* refund deposited directly intoyour checking account.

buy groceries, gasoline and other purchases at the point-of-sale, using a check card rather thancash, credit or a personal check.

use a smart card with a prepaid amount of money embedded in it for use instead of cash at a pay

phone, e*pressway road toll, or on college campuses at the library+s photocopy machine orbookstores.

use your computer and personal finance software to coordinate your total personal financialmanagement process, integrating data and activities related to your income, spending, saving,investing, recordkeeping, bill-paying and ta*es, along with basic financial analysis and decisionmaking.

Automated Teller Machines (ATMs)also called -hour tellers are electronic terminals which give

consumers the opportunity to bank at almost any time. To withdraw cash, make deposits or transfer fundsbetween accounts, a consumer needs an "T& card and a personal identification number. ome "T&scharge a usage fee for this service, with a higher fee for consumers who do not have an account at theirinstitution. (f a fee is charged, it must be revealed on the terminal screen or on a sign ne*t to the screen.


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T$%es of Elecronic C&rrenc$

#hec" #ards, the new name for debit cards, can be used instead of cash, personal checks or credit

cards. "s stated, when you use a check card you transfer funds immediately from your account to thestore+s account. " growing number of consumers use check cards because they eliminate the hassle andrisks of writing checks or carrying large amounts of cash. (mportant facts you need to know are:

%ou have less bargaining power with a check card than with a credit card. 1ith a credit card youhave the right to refuse to pay for the purchase if you are not satisfied. 1ith a debit card you havealready paid for the product, so you have less bargaining power with the merchant.

" thief with your check card and '() number can take all the money in your account. The thief

can even make point-of-sale purchases without your '().

%our liability is limited to 345 if you report the checkcard loss within two days, any longer and yourliability can go to 3455. "fter 65 days, you can be responsible for the entire amount.

&ote: &aster2ard and 7isa have voluntarily capped the loss liability of checkcard holders at 345. 0"swelcome as these voluntary protections are, they are too important to be left to the kindness of bankmarketing departments,0 writes #onsumer 'eports. The consumer advocacy maga/ine advocatesfederal law changes to make consumer liability caps mandatory.

(n an era of increasing bank fees, consumers can e*pect to pay for the service of using acheckcard.

(t is the consumer+s responsibility to keep checkcard receipts and deduct the dollar amounts ofthe purchase from your bank balance immediately, in order to avoid overdraft changes.

Smart #ards, sometimes called stored-value cards, have a specific amount of credit embeddedelectronically in the card. !or e*ample, a 3855 smart card that you have purchased in advance can be

used to cover e*penses such as pay phone charges, bridge or e*pressway tolls, parking fees or (nternetpurchases. These cards make the transaction fast, easy and convenient.

mart card technology is in a period of rapid change. 9ltimately consumers should be able to customi/etheir smart cards to suit their f inancial needs with access from their personal computer or cellular phone


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Di%ital chec"sallow consumers to use their personal computers to pay recurring bills. 2onsumers canuse computer software provided by a bank, or they can use personal finance software packages such as;uicken or &icrosoft &oney and subscribe to an electronic bill-paying service.

The technology of paying bills electronically by home computers is advancing rapidly, but relatively fewbusinesses currently can accept payments made directly by computers. ? lectronic !unds Transfer "ct is the governing statute while the !ederal @eserve Aoard+s@egulation 00 provides guidelines on electronic funds transfer card liability. The regulations require that:

a valid !T card can be sent only to a consumer who requests it.

unsolicited cards can be issued only if the card cannot be used until validated.

the financial institution must inform you of your rights and responsibilities under the law in a

written Disclosure Statement, including the procedure to correct errors in your periodicstatements.

the user is entitled to a written receipt when making deposits or withdrawals from an "T& or usinga point-of-sale terminal to make a purchase. The receipt must show the amount, date and type oftransfer.

periodic statements must confirm the amount of all transfers, the dates and types of transfers,type of accounts to or from which funds were transferred, and the address and phone number to

be used for inquiries regarding the statement.

Prolems and rrors. %ou have 65 days from the date a problem or error appears on your writtenterminal receipt or on your periodic statement to notify your financial institution. (f you fail to notify thefinancial institution of the error within 65 days you may have little recourse 9nder federal law the


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Automatic Deit Scamshttp:BBwww.in.govBdfiBeducationB"utomcm.html

#redit and ATM #ardshttp:BBwww.in.govBdfiBeducationB2r"T&.html

#yer Shoppin%

http:BBwww.dfi.state.in.usBconscreditB2ybersh.html

Deit #ards vs- #redit #ards

http:BBwww.in.govBdfiBeducationBdebitCvs.htm

lectronic $an"in%http:BBwww.in.govBdfiBeducationBebk.htm
http://www.in.gov/dfi/education/AutomScm.htmlhttp://www.in.gov/dfi/education/AutomScm.htmlhttp://www.in.gov/dfi/education/CrATM.htmlhttp://www.dfi.state.in.us/conscredit/Cybersh.htmlhttp://www.in.gov/dfi/education/debit_vs.htmhttp://www.in.gov/dfi/education/ebk.htmhttp://www.in.gov/dfi/education/AutomScm.htmlhttp://www.in.gov/dfi/education/CrATM.htmlhttp://www.dfi.state.in.us/conscredit/Cybersh.htmlhttp://www.in.gov/dfi/education/debit_vs.htmhttp://www.in.gov/dfi/education/ebk.htm


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*ISC+SSION TO'ICS

8. List several e*amples of electronic funds transfers and discuss your e*periences with !Ts.

.


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ACTIVIT,

8. (nvite a resource person from a local bank or credit union to come to your classroom to e*plain their!T services. "sk about costs, consumer problems, consumer protections under the law, and theresource person+s vision of new uses of electronic money in the future.

. urvey several friends about their e*periences with electronic money and their greatest concerns.

D. 9sing the !T 2&'"@() 1@FGT #last page$, evaluate the !T services provided by localfinancial institutions, including costs, benefits and restrictions. $.

lec!ronic Commerce and The "u!ure o# Money$ Technology and %ou, by Tariq F.

&uhammad, Alack nterprise, pp. 44-4=, #Iune 8==>$.

Ho& ill e Pay (n The )n!erne!?by Iames &c"ndrews, 2onsumers+ @esearch, pp. =-DD,#"pril 8==>$


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2hicago, (L 656=5-5?DTelephone: #D8$ D-4888

'!m%.les

"vailable free from:$oard of .overnors of the Federal 'eserve System'ublications ervices


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#onsumer Information #enterA consumer,s .uide To the 9pandin% :ses of ATM cards8 Shoppin% With

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http://www.pueblo.gsa.gov/http://www.fms.treas.gov/eft/general.htmlhttp://www.pueblo.gsa.gov/cic_text/money/shop-atm.txthttp://www.pueblo.gsa.gov/cic_text/money/shop-atm.txthttp://www.pueblo.gsa.gov/http://www.fms.treas.gov/eft/general.htmlhttp://www.fms.treas.gov/eft/general.htmlhttp://www.pueblo.gsa.gov/cic_text/money/shop-atm.txthttp://www.pueblo.gsa.gov/cic_text/money/shop-atm.txt


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E(T CO'ARISON WORKSHEET

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Fraudulent telemarketers have found yet another way to steal your money, this time from your checking account. Consumers across the country are complaining about unauthorizeddebits (withdrawals) from their checking accounts.

Automatic debiting of your checking account can be a legitimate payment method many people pay mortgages or make car payments this way. !ut the system is being abused byfraudulent telemarketers. "herefore, if a caller asks for your checking account number or other information printed on your check, you should follow the same warning that applies toyour credit card number ## do not give out checking account information over the phone unless you are familiar with the company and agree to pay for something . Remember,if you give your checking account number over the phone to a stranger for $verification$ or $computer purposes,$ that person could use it to improperly take money from your checkingaccount.

HOW THE SC! WOR"S

%ou either get a postcard or a telephone call saying you have won a free prize or can &ualify for a ma'or credit card, regardless of past credit problems. f you respond to the offer, thetelemarketer often asks you right away, $o you have a checking account*$ f you say $yes,$ the telemarketer then goes on to e+plain the offer. ften it sounds too good to pass up.

-ear the end of the sales pitch, the telemarketer may ask you to get one of your checks and to read off all of the numbers at the bottom. ome deceptive tele#marketers may not tell youwhy this information is needed. ther deceptive telemarketers may tell you the account information will help ensure that you &ualify for the offer. And, in some cases, the legitimatetelemarketer will honestly e+plain that this information will allow them to debit your checking account.

nce a telemarketer has your checking account information, it is put on a $demand draft,$ which is processed much like a check. "he draft has your name, account number, and states anamount. /nlike a check, however, the draft does not re&uire your signature. 0hen your bank receives the draft, it takes the amount on the draft from your checking account and pays thetelemarketers1 bank. %ou may not know that your bank has paid the draft until you receive your bank statement.

WHT #O$ C% &O TO 'ROTECT #O$RSE()

t can be difficult to detect an automatic debit scam before you suffer financial losses. f you do not know who you are talking to, follow these suggestions to help you avoid becoming avictim2

on1t give out your checking account number over

the phone unless you know the company andunderstand why the information is necessary.

f someone says they are taping your call, ask why.

on1t be afraid to ask &uestions.

Companies do not ask for your bank account

information unless you have e+pressly agreed tothis payment method.

*TS THE (W

ince ecember 34, 4556, a seller or telemarketer is re&uired by law to obtain your verifiable authorization to obtain payment from your bank account. "hat means whoever takes yourbank account information over the phone must have your e+press permission to debit your account, and must use one of three ways to get it. "he person must tell you that money will betaken from your bank account. f you authorize payment of money from your bank account, they must then get your written authorization, tape record your authorization, or send you awritten confirmation before debiting your bank account.

f they tape record your authorization, they must disclose, and you must receive, the following information2


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"he date of the demand draft

the amount of the draft(s)

the payers1 name (who will receive your money)

the number of draft payments (if more than one)

a telephone number that you can call during

normal business hours and

the date that you are giving your oral

authorization.

f a seller or telemarketer uses written confirmation to verify your authorization, they must give you all the information re&uired for a tape recorded authorization and tell you in theconfirmation notice the refund procedure you can use to dispute the accuracy of the confirmation and receive a refund.

WHT TO &O *) #O$ RE +*CT*!

f telemarketers cause money to be taken from your bank account without your knowledge or authorization, they have violated the law. f you receive a written confirmation notice thatdoes not accurately represent your understanding of the sale, follow the refund procedures that should have been provided and re&uest a refund of your money. f you do not receive arefund, it1s against the law.

f you believe you have been a victim of fraud, contact your bank immediately. "ell the bank that you did not okay the debit and that you want to prevent further debiting. %ou alsoshould contact your state Attorney 7eneral. epending on the timing and the circum#stances, you may be able to get your money back.

!ORE *%)OR!T*O%

"o learn more about your rights under the telemarket#ing ales 8ule and how to protect yourself from fraudulent telephone sales practices, re&uest a free copy of Straight Talk AboutTelemarketing. Contact.

Consumer 8esponse CenterFederal "rade Commission0ashington C 9:6;:

(9:9) 39


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"he ndiana epartment ofFinancial nstitutions, ivision of ConsumerCredit has many other credit relatedbrochures available, such as2

Answers to Credit =roblemsApplying for CreditAt >ome hopping 8ights!ankruptcy Facts!uried in ebtCar Financing camsCharge Card FraudChoosing A Credit CardCo#igningCredit and ivorceCredit and lder Consumerseep in ebt*?&ual Credit pportunityFair Credit 8eportingFair ebt Collection7old Cards>ang up on Fraud>igh 8ate @ortgages>ome ?&uity Credit ines>ow to Avoid !ankruptcyndiana /niform Consumer Credit Codeook !efore you ease@ortgage oans8epossession8everse @ortgage oans8ule of B;s 0hat is it*coring for Credithopping for Credit/sing Credit CardsDariable 8ate Credit0hat is a !udget*0hat is the F*

Call our toll#free number or write to theaddress on the cover for a copy of any of the

brochures listed or forfurther consumer credit information.


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Automatic Debit Scams

&E'RT!E%T O) )*%%C*(*%ST*T$T*O%S

Consumer Credit ivision3: outh @eridian treet, uite 3::

ndianapolis, ndiana E


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What To &o *f They,re (ost or Stolen

Many people find it easy and convenient to use credit and ATM cards. The Fair Credit Billing Act (FCBA) and the Electronic Funds Transfer Act (EFTA) offer procedures for you and businesses to use if yourcards are lost or stolen.

Limiting Your Financial Loss

Report the loss or theft of your credit and ATM cards to the card issuers as uic!ly as possible. Many co"panies have toll#free nu"bers and $%#hour service to deal &ith such e"ergencies. 'ts a good ideato follo& up your phone calls &ith a letter. 'nclude your account nu"ber &hen you noticed your card &as "issing and the date you first reported the loss.

*ou also "ay &ant to chec! your ho"eo&ners insurance policy to see if it covers your liability for card thefts. 'f not so"e insurance co"panies &ill allo& you to change your policy to include thisprotection.

Credit Card Loss. 'f you report the loss before the cards are used the FCBA says the card issuer cannot hold you responsible for any unauthori+ed charges. 'f a thief uses your cards before you reportthe" "issing the "ost you &ill o&e for unauthori+ed charges is ,- per card. This is true even if a thief uses your credit card a t an ATM "achine to access your credit card account.

/o&ever its not enough si"ply to report your credit card loss. After the loss revie& your billing state"ents carefully. 'f they sho& any unauthori+ed charges send a letter to the card issuer describing eachuestionable charge. Again tell the card issuer the date your card &as lost or stolen and &hen you first reported it to the". Be sure to send the letter to the address provided for billing errors. 0o not send it

&ith a pay"ent or to the address &here you send your pay"ents unless you are directed to do so.

ATM Card Loss.'f you report an ATM card "issing before its used &ithout your per"ission the EFTA says the card issuer cannot hold you responsible for any unauthori+ed &ithdra&als. 'f unauthori+eduse occurs before you report it the a"ount you can be held liable for depends upon ho& uic!ly you report the loss. For e1a"ple if you report the loss &ithin t&o business days after you reali+e your cardis "issing you &ill not be responsible for "ore than ,- for unauthori+ed use.

/o&ever if you dont report the loss &ithin t&o business days after you discover the loss you could lose up to ,- because of an unauthori+ed &ithdra&al. *ou ris! unli"ited loss if you fail to report anunauthori+ed transfer or &ithdra&al &ithin 2 days after your ban! state"ent is "ailed to you. That "eans you could lose all the "oney in your ban! account and the unused portion of your line of creditestablished for overdrafts.

'f unauthori+ed transactions sho& up on your ban! state"ent report the" to the card issuer as uic!ly as possible. 3nce youve reported the loss of your ATM card you cannot be held liable for additionala"ounts even if "ore unauthori+edtransactions are "ade.

Protecting Your Cards

The best protections against card fraud are to !no& &here your cards are at all ti"es and to !eep the" secure. For ATM card protection its i"portant to !eep your 4ersonal 'dentification 5u"ber (4'5) asecret. 0ont use your address birth date phone or social security nu"ber. Me"ori+e the nu"ber. 6tatistics sho& that in one#third of ATM card frauds cardholders &rote their 4'56 on their ATM cards or

on slips of paper !ept &ith their cards.

The follo&ing suggestions "ay help you protect your credit and ATM card accounts.

For Credit Cards:

Be cautious about disclosing your account nu"ber over the phone unless you !no& you are dealing &ith a reputable co"pany.

5ever put your account nu"ber on the outside of an envelope or on a pos tcard.

0ra& a line through blan! spaces on charge slips above the total so the a"ount cannot be changed.

0ont sign a blan! charge slip.

Tear up carbons and save your receipts to chec! against your "onthly billing state"ents.


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3pen billing state"ents pro"ptly and co"pare the" &ith your receipts. Report "ista!es or discrepancies as soon as possible to the special address listed on your state"ent for 7billing inuiries.7

8nder the FCBA the card issuer "ust investigate billing errors reported to the" &ithin 2 days of the date your state"ent &as "ailed to you.

9eep a record : in a safe place separate fro" your cards : of you r account nu"bers e1piration dates and the telephone nu"bers of each card issuer so you can report a loss uic!ly.

Carry only those cards that you anticipate youll need.

For ATM cards:

0ont carry your 4'5 in your &allet or purse or &rite it on your ATM card.

5ever &rite your 4'5 on the outside of a deposit slip an envelope or on a postcard.

Ta!e your ATM receipt after co"pleting a transaction.

Reconcile all ATM receipts &ith ban! state"ents as soon as possible.

Buying a Registration Serice

For an annual fee of ,; to ,


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The 'ndiana 0epart"ent of Financial 'nstitutions 0ivision ofConsu"er Credit has "any other credit related brochuresavailable such as>

"nswers to 2redit 'roblems"pplying for 2redit"t Gome hopping @ightsAankruptcy !actsAuried in ?s K 1hat is itEcoring for 2redithopping for 2redit9sing 2redit 2ards7ariable @ate 2redit1hat is a AudgetE1hat is the

Call our toll#free nu"ber or &rite to the address on the cover for

a copy of any of the brochures listed or for further consu"ercredit infor"ation..

CR!D"T

A#D

ATM CARDS

DPA'TM&T 3F FI&AIA I&STIT:TI3&S2onsumer 2redit -D-D=448-?55-D?-??5


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PR$T!CT"#% Y$&RS!LF '(!# B&Y"#% $#L"#!

?ith a fe& !ey stro!es and the clic! of a "ouse you can shop at ho"e fro" your co"puter. 6ounds great right= 5o traffic. 5o par!ing proble"s. 5o lines or cro&ds. 5o hassles &ith the &eather.

3nline shopping can give ne& "eaning to convenience and choice. But before you visit your favorite boutiue on the 5et ta!e care to "a!e your cyber#shopping e1perience safe.

T(! BAS"CS

Thin! security starting &ith your connection ## the &ay your co"puter connects through telephone &ires to contact the 'nternet ## and your bro&ser ## the soft&are that acts li!e a telephone to receiveinfor"ation on the 'nternet.

8nsecured infor"ation sent over the 'nternet can be intercepted. Thats &hy you should consider a secure bro&ser &hich &ill encrypt or scra"ble purchase infor"ation. 8se a secure bro&ser thatco"plies &ith industry standards such as 6ecure 6oc!ets @ayer (66@) or 6ecure /yperte1t Transfer 4rotocol (6#/TT4). These often are included &ith 'nternet connection services. The credit and chargecard industry is &or!ing on an enhanced level of security using 6ecured Electronic Transactions (6ET). 6ET protocol provides a highly encrypted co""unication bet&een card issuers "erchants and card"e"bers.

'f you dont have encryption soft&are to assure the security of your transaction consider calling the co"panys nu"ber fa1ing your order or paying by chec! or "oney order.

6hop &ith co"panies you !no&. 'f youd li!e to try a ne& "erchant as! for a paper catalog or brochure to get a better idea of their "erchandise and services. 0eter"ine the co"panys refund and returnpolicies before you place an order.

#eer gie out your "nternet )ass*ord.Be original &hen creating your pass&ord(s). Consider using a co"bination of nu"bers letters and sy"bols or use a phrase to re"e"ber it. For e1a"ple> 8R$,% ## 7*ou are to give "oney for eightstars.7

Avoid using established nu"bers for your pass&ord such as your house nu"ber birth date or a portion of your telephone or 6ocial 6ecurity nu"bers. 'ts a good idea to use different pass&ords to accessspecific areas on the 'nternet such as the ?orld ?ide ?eb.

Be cautious if youre as!ed to supply personal infor"ation to conduct a transaction such as your 6ocial 6ecurity nu"ber. 'ts rarely necessary and should raise a red flag. The 'nternet provides a valuableinfor"ation service for consu"ers. But so"e con artists &ho have used tele"ar!eting info"ercials ne&spapers "aga+ines and the "ail to attract consu"ers are turning to the 'nternet and onlineservices to pro"ote their sca"s.

4ay close attention to the infor"ation youDre entering &hen you place an order. For e1a"ple an additional !eystro!e could get you ; shirts &hen you &anted only one. Chec! to "a!e sure the shippingcharge is acceptable to you and all charges are calculated correctly.

Ma!e a note of the co"panys shipping ti"e. 'f you need the "erchandise earlier as! if your order can be 7e1pressed7 for an additional fee.

The sa"e la&s that protect you &hen you shop by phone or "ail apply &hen you shop in cyberspace> 8nder the la& a co"pany should ship your order &ithin the ti"e stated in its ads. 'f no ti"e ispro"ised the co"pany should ship your order &ithin


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4rint out a copy of your order and confir"ation nu"ber for your records.

T+e Fair Credit Billing Act

?hether youDre buying online by phone "ail or in person at a store using your credit or charge card to pay offers so"e protections.

!rrors,

'f you find a billing error on your "onthly credit or charge card state"ent you "ay dispute the charge and &ithhold pay"ent in that a"ount &hile the error is in dispute. The error "ight be a charge for the&rong a"ount for so"ething you didnt accept or for so"ething that &asnt delivered as agreed.

To Dis)ute a C+arge,

?rite to the creditor at the special address indicated on the "onthly state"ent for 7billing inuiries.7 'nclude your na"e address and credit or charge card nu"ber and describe the billing error.

6end your letter as soon as possible. 't "ust reach the creditor &ithin 2 days after the first bill containing the error &as "ailed to you.

The creditor "ust ac!no&ledge your co"plaint in &riting &ithin auto"obiles credit products and services and tele"ar!eting. *ou can contact the FTC at> Consu"er Response CenterFederal TradeCo""ission ?ashington 0.C. $- $$#$$#&&&.ftc.gov.

The 'ndiana 0epart"ent of Financial 'nstitutions 0ivision ofConsu"er Credit has "any other credit related brochures

available such as>

"nswers to 2redit 'roblems"pplying for 2redit"t Gome hopping @ightsAankruptcy !actsAuried in ?s K 1hat is itEcoring for 2redithopping for 2redit9sing 2redit 2ards7ariable @ate 2redit1hat is a AudgetE1hat is the

Call our toll#free nu"ber or &rite to the address on the cover fora copy of any of the brochures listed or for further consu"ercredit infor"ation.


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CYB!R

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As debit cards become increasingly popular, strains are appearing among customers, merchants, and banks.

"he problems range from difficulties when the cards are lost or stolen to complaints from merchants that the fees to accept these cards are too high.

%ot ll 'lastic is Created E-ual

-ew car rental rules represent the first case in which debit cards cannot be used in the same way as credit cards. "he big car rental companies, including>ertz and Avis, have recently stopped letting people rent cars using 'ust a Disa Check card or the similar @aster @oney card from @asterCard. "he cardcompanies, and the banks that issue these cards # known as debit cards # are furious. And so are some customers.

For years, the car rental companies have used possession of a credit card as a crude way to weed out potentially risky renters, 'ust as they have usuallyruled out renters under the age of 96. !ut this test does not work with debit cards because banks will now give them to nearly any one with a bankaccount.

Charges on debit cards, which go under many names, come directly out of a consumer1s checking account almost immediately rather than appearing on a

monthly credit card statement. n contrast to using a credit card, which the debit card physically resembles, no loan is involved in the transaction.ebit cards $provide no &ualification of credit#worthiness,$ a >ertz spokesperson said. Car rental companies believe they are entitled to a certain level ofconfidence because in car rental, unlike almost any other business, the customer is given total control of a vehicle with an appro+imate value of 9:,:::.

"he rental car companies are re&uiring a customer with only a debit card to follow the same procedures as someone who pays cash to rent a car. "hatinvolves making an application several weeks in advance and leaving a substantial deposit.

Higher )ees.

"he new debit cards have become more popular because they are easier to use and more widely accepted than those that re&uire personal identificationnumbers. @oreover, for the tens of millions of Americans who do not &ualify for a credit card, the cards are their first opportunity to put a card with a@asterCard or Disa label in their wallets.

/ntil recently, such cards also provided the easiest way for such individuals, many of whom have had financial troubles, to rent a car or buy merchandiseover the phone.!anks like the debit cards because transactions on them are less costly to process than paper checks. Also, some banks charge customers a fee for thecards. And for the @asterCard and Disa versions, banks receive a fee from merchants of about one percent of the purchase price. 8etailers, though, havebecome increasingly unhappy about the growth of these debit cards precisely because they do not want to pay the fee.

Confusingly, a single card can have both a Disa or @asterCard logo and the mark of an automated teller machine network like -%C? or @AC. f asignature is used, rather than a personal identification number, the fee paid by the merchant is higher.


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"he credit card companies say the higher fee is 'ustified because of the greater risk. ?ven though both types of transactions involve electronic verificationof the amount of money in the consumer1s checking account, the card companies say their e+perience has been that the signature method results in moreoverdrafts.

For consumers, the debit cards also carry a little more risk. f the card is stolen, a thief can go on a spending spree with the money in the customer1schecking account.

Federal law limits liability to 6: if the cardholder notifies the bank within two days of discovering the missing card. !ut the bank has up to 9: days toput the money back into the checking account.

ee our !rochure on Credit and A"@ Cards.


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"he ndiana epartment of Financial nstitutions,ivision of Consumer Credit has many other creditrelated brochures available, such as2

Answers to Credit =roblemsApplying for CreditAt >ome hopping 8ights

!ankruptcy Facts!uried in ebt

Car Financing camsCharge Card FraudChoosing A Credit Card

Co#igningCredit and ivorceCredit and lder Consumerseep in ebt*

?&ual Credit pportunityFair Credit 8eportingFair ebt Collection7old Cards>ang up on Fraud

>igh 8ate @ortgages>ome ?&uity Credit ines

>ow to Avoid !ankruptcyndiana /niform Consumer Credit Code

ook !efore you ease@ortgage oans8epossession8everse @ortgage oans8ule of B;s 0hat is it*

coring for Credithopping for Credit/sing Credit CardsDariable 8ate Credit

0hat is a !udget*0hat is the F*

Call our toll#free number or write to the address on thecover for a copy of any of the brochures listed or forfurther consumer credit information.

D!B"T

s.

CR!D"TCARDS

&E'RT!E%T O) )*%%C*( *%ST*T$T*O%S

Consumer Credit ivision3: outh @eridian treet, uite 3::

ndianapolis, ndiana E


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)ST )CTS

Electronic ban!ing also !no&n as electronic fund transfer (EFT)

uses co"puter and electronic technology as a substitute for chec!sand other paper transactions.

An access device is a "eans of gaining access to your account

such as a card or a code for the purpose of initiating EFTs. Mostinstitutions use a personal identification nu"ber (4'5) for thispurpose.

Ta!e care of your EFT card. 9no& &here it is at all ti"es and

report its loss as soon as possible.

Choose a 4'5 different fro" your address telephone nu"ber

social security nu"ber or birth date.

9eep and co"pare your EFT receipts &ith your periodic

state"ents so that you can find and pro"ptly report errors andunauthori+ed transfers. 4ro"pt reporting is necessary to li"it yourliability for these proble"s

To "ost of us electronic ban!ing "eans having $%#hour access to cash through an auto"ated teller "achine (ATM) or having our paychec!s deposited directly into our chec!ing or savings accounts. But electronic ban!ing offers

several other services that you "ay find useful.This brochure lists types of consu"er transactions that are covered under the federal Electronic Fund Transfer Act (EFT Act) discusses the infor"ation financial institutions "ust disclose e1plains &hat you can do if you finderrors on your "onthly state"ents discusses your liability if your ATM card is lost or stolen and describes your li"ited stop#pay"ent privileges.

E(ECTRO%*C )$%& TR%S)ERS

Electronic ban!ing also !no&n as electronic fund transfer (EFT) uses co"puter and electronic technology as a substitute for chec!s and other paper transactions. Because EFTs are so convenient you "ay &ish to !no& the fullrange of their services.

Automated Teller Mac+ines or /0+our Tellers are electronic ter"inals that per"it you to ban! at al"ost any ti"e of the day or night. To &ithdra& cash "a!e deposits or transfer funds bet&een accounts you generally inserta special ATM card and enter your personal identification nu"ber (4'5).

Direct De)osits or 'it+dra*alsallo& you to authori+e specific deposits such as paychec!s and social security chec!s to go directly to your account on a regular basis. *ou also can arrange to have recurring bills such asinsurance pre"iu"s and utility bills paid auto"atically. This service applies only if you authori+e transactions in advance.

PaybyP+one Systemsper"it you to telephone your ban! (or other financial institutions) &ith instructions to pay certain bills or to transfer funds bet&een accounts. *ou "ust have an agree"ent in advance &ith the financialinstitution to "a!e such transfers.

Pointo1Sale Trans1ersallo& you to pay for retail purchases &ith an EFT (or 7debit7) card. This is si"ilar to using a credit card but &ith one i"portant e1ception ## the "oney for the purchase is transferred i""ediately (or soonthereafter) fro" your ban! account to the stores account. Both MasterCard and Gisa a"ong others offer debit cards that can be used at participating retailers and an increasing nu"ber of "erchants are accepting this type ofpay"ent. For e1a"ple these transfers are beco"ing "ore co""on at grocery stores oil co"panies and convenience stores. /o&ever because point of sale transfers are still relatively ne& they "ight not yet be &idelyavailable at retailers in your region of the country.

&*SC(OS$RES

The best &ay to understand your legal rights and responsibilities regarding your EFT account is to read the docu"ents you receive fro" the financial institution that issued you the 7access device.7 An access device is a cardcode or other "eans of gaining access to your account for the purpose of initiating electronic fund transfers. The "eans "ay vary fro" institution to institution but "ost use a 4'5 for this purpose. This uniue nu"ber should be!no&n only to you and to select e"ployees of the financial institution.

Before you contract for EFT services or "a!e your first electronic transfer the institution is reuired to disclose to you the follo&ing infor"ation in a for" you can !eep.


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A su""ary of your liability for unauthori+ed transfers.

The telephone nu"ber and address of the person to be notified &hen you believe that an unauthori+ed transfer has been or "ay be "ade along &ith a state"ent of the institutions 7business days.7 This infor"ation &ill tell

you the nu"ber of days you have to report suspected unauthori+ed transfers.

The type of transfers you can "a!e the a"ount of any charges for transfers and any li"itations on the freuency and dollar a"ount of transfers.

A su""ary of your ri ght to receive docu"entation of transfers of your right to stop pay"ent on a pre#authori+ed transfer and the procedures to follo& to stop pay"ent.

A notice describing the procedures you "ust follo& to report an error on a receipt for an EFT ho& to reuest "ore infor"ation about a transfer listed on your state"ent and the ti"e period in &hich you "ust "a!e your

report.

A su""ary of the institutions liability to you if it fails to "a!e or stop certain transactions.

Circu"stances under &hich the institution &ill disclose infor"ation to third parties concerning your account.

'n addition to these disclosures you &ill receive for "ost transactions t&o other types of i"portant papers ## ter"inal receipts and periodic state"ents. (6eparate rules apply to passboo! accounts fro" &hich pre#authori+edtransfers are dra&n. *our contract for that account is the best source of infor"ation about those rules.) *ou are entitled to a ter"inal receipt each ti"e you initiate an electronic transfer &hether you use an ATM or "a!e a point#of#sale electronic transfer. A"ong other things the receipt "ust sho& the date and the a"ount of the transfer and the type of the transfer such as 7transfer fro" savings to chec!ing.7 ?hen you "a!e a point#of#sale transfer youprobably &ill get your ter"inal receipt fro" the salesperson. 'f you "a!e a &ithdra&al fro" a cash#dispensing "achine that cannot issue receipts the institution is reuired to "ail you a receipt on the ne1t business day follo&ingthe transfer.

#e* )roisions to t+e !FTA effective i""ediatelyH co"pliance "andatory as of 3ctober ; $; reuire ATM operators that i"pose a fee for providing electronic fund transfer services to post a notice in a pro"inent andconspicuous location on or at the ATM. The operator "ust also disclose that a fee &ill be i"posed and the a"ount of the fee either on the screen of the "achine or on a paper notice before the consu"er is co""itted toco"pleting the transaction. 'n addition &hen the consu"er contracts for an electronic fund transfer service financial institutions are reuired to provide initial disclosures including a notice that a fee "ay be i"posed forelectronic fund transfers initiated at an ATM operated by another entity.

*ou also are entitled to a periodic state"ent for each state"ent cycle in &hich an electronic transfer is "ade. This state"ent "ust sho& a"ong other things the a"ount of any transfer the date i t &as credited or debited to youraccount the type of transfer and type of account(s) to or fro" &hich funds &ere transferred and the address and telephone nu"ber to be used for inuiries. *ou are entitled to a uarterly state"ent even if you "ade noelectronic transfers &ithin that uarter.

9eep and co"pare your EFT receipts &ith your periodic state"ents each "onth in the sa"e &ay you co"pare your credit card invoices &ith your "onthly credit card state"ent or your chec!s against your "onthly ban!state"ents. 0oing so &ill enable you to "a!e the best use of your rights under federal la& to dispute errors and avoid liability for unauthori+ed transfers.

ERRORS

*ou have 2 days fro" the date a proble" or error appears on your periodic state"ents or ter"inal receipt to notify your financial institution. The best &ay to protect yourself in the event of an error (or a lost or stolen ATM or EFTcard) is to notify the issuer by certified letter return receipt reuested so you can prove that the institution received your letter. 9eep a copy of the letter you send for your records.

After notification about an error on your state"ent the institution has ; business days to investigate and tell you the results. 'f the institution needs "ore ti"e it "ay ta!e up to %- days to co"plete the investigation ## but only ifthe "oney in dispute is returned to your account and you are notified pro"ptly of the credit. At the end of the investigation if no error is found the institution "ay ta!e the "oney bac! if it sends you a &ritten e1planation.

'f you fail to notify the institution of the error &ithin 2 days you "ay have little recourse. 8nder federal la& the institution has no obligation to conduct an investigation if you have "issed the 2#day deadline.

'f your failure to notify the institution &ithin the ti"e periods allo&ed &as due to an e1tenuating circu"stance such as lengthy travel or illness the issuer "ust e1tend the ti"e period for notification to &hat is reasonable. Also if

state la& or your contract i"poses lo&er liability li"its those lo&er li"its apply instead of the li"its in the federal EFT Act.

After reporting the loss or theft of your ATM card you are not liable for additional unauthori+ed transfers that "ay be "ade. Because these unauthori+ed transfers "ay appear on your state"ents ho&ever you should carefullyrevie& each state"ent you receive after you report the loss or theft. 'f the state"ent sho&s transfers that you did not "a!e or that you need "ore infor"ation about contact the institution i""ediately using the specialprocedures provided for reporting errors.

(*!*TE& STO'/'#!E%T 'R*+*(E0ES

?hen you use an electronic fund transfer the EFT Act does not give you the right to stop pay"ent. 'f your purchase is defective or if your order is not delivered it is up to you to resolve the proble" &ith the seller and get your"oney bac! ## Iust as if you had paid cash.

There is one situation ho&ever in &hich you can stop pay"ent. 'f you have arranged regular pay"ents out of your account to third parties such as life insurance co"panies you can stop pay"ent if you notify your i nstitution atleast three business days before the scheduled transfer. The notice "ay be oral or &ritten but the institution "ay reuire a &ritten folloup to be "ade &ithin ;% days of the oral notice. *our failure to provide the &ritten folloup ends the institutions responsibility to stop pay"ent. This right to stop pay"ent does not apply to "ortgage or loan pay"ents you o&e to the institution that issued the EFT access device.

Although federal la& provides only li"ited rights to stop pay"ent individual financial institutions "ay offer "ore rights or state la&s "ay reuire the". 'f this feature is i"portant to you you "ay &ant to shop around to be sureyou are getting the best 7stop pay"ent7 ter"s available.


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S$00EST*O%S

'f you decide to beco"e an EFT user re"e"ber the follo&ing precautions.

Ta!e care of your EFT card. 9no& &here it is at all ti"es and report its loss as soon as possible.

Choose a 4'5 different fro" your address telephone nu"ber social security nu"ber or birth date. Choosing a different nu"ber &ill "a!e it "ore difficult for a thief to use your EFT card.

9eep and co"pare your EFT receipts &ith your periodic state"ents so that you can find and pro"ptly report errors and unauthori+ed transfers.

'f you believe the institution that issued your EFT access device has failed to fulfill its responsibilities to you under the EFT Act in addition to infor"ing the issuer you "ay &ish to co"plaint to the federal agency that hasenforce"ent Iurisdiction over that issuer

The 'ndiana 0epart"ent of Financial 'nstitutions 0ivision of Consu"er Credit has "any other credit related brochures available such as >

"nswers to 2redit 'roblems"pplying for 2redit"t Gome hopping @ightsAankruptcy !actsAuried in ?s K 1hat is itE

coring for 2redithopping for 2redit9sing 2redit 2ards

7ariable @ate 2redit1hat is a AudgetE1hat is the


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!L!CTR$#"C

BA#2"#%

DPA'TM&T 3F FI&AIA I&STIT:TI3&S2onsumer 2redit -D-D=44

8-?55-D?-??5


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SW*%&(ERS H+E CO!'$TERS TOO

Cyberspace is a vast ne& territory for unscrupulous "ar!eters. The 5ational Fraud 'nfor"ation Center reports that &hile fraudulent co""ercial activity on the 'nternet is not yet a "aIor proble" as usee1pands there is sure to be a "aIor increase in deceptive and "isleading pro"otions.

6&indlers are attracted to the 'nternet because they can reach thousands of consu"ers ine1pensively uic!ly and anony"ously. Fe& restrictions e1ist on the 'nternet "a!ing it easy to place deceptive or"isleading infor"ation online.

Judging the accuracy and reliability of online infor"ation is a "aIor challenge for consu"ers. False or "isleading infor"ation related to personal finance or health issues for e1a"ple could lead to serious

conseuences for unsuspecting consu"ers.

)R$& O% THE %ET

The Federal Trade Co""ission began investigating fraud on the 'nternet in ;%. They found that the sa"e !inds of fraud that occur in other places also surface on the 5et. Electronic bulletin boards chatgroups and e#"ail net&or!s are fertile grounds for old#fashioned sca"s that apply false advertising clai"s and deceptive "ar!eting practices.

!lectronic Bulletin Boardsprovide ne& sources of infor"ation to 'nternet users telling about products services and invest"ent opportunities. At the sa"e ti"e these electronic bulletin boards can carryfalse and "isleading ads for products that pro"ise uic! solutions to desirable goals such as &eight loss or easy business success. The plan is to have you use your 4C to "a!e plenty of "oney in a shortperiod of ti"e.

Discussion grou)s or c+at 1orumsoften for" on the 'nternet &here interested parties can e1change infor"ation on specific topic areas. These chat roo"s so"eti"es appear to be open discussion &henthey are sales pitches in disguise. 'n so"e cases people involved in the discussion "ay have financial ties to businesses that sell products or services related to the topic area. This disguised advertising

"ay not be obvious to the consu"er.

!mail scams involve individuals or co"panies intentionally "isleading consu"ers or using deceptive "ar!eting practices to gain the consu"ers interest in their product. For e1a"ple the use of aparticular product is advertised to cure a specific "edical condition. These are the sa"e health diet and fitness sche"es that occur in other "ar!etplace venues such as "ail#order and tele"ar!etingsche"es. 3ther types of e#"ail sca"s involve the sale of &orthless products phony credit repair co"panies ter" paper peddlers e1pensive &or!#at#ho"e deals psychic hotlines and deceptive pro"isesrelated to contests a&ards s&eepsta!es and free gifts.

Pyramid or Pon-i sc+emes and c+ain letters are &ell suited to the 'nternet because they entice investors &ith the pro"ise of uic! profits using a ho"e co"puter. 'nvestors "a!e "oney by recruitingne& investors. The proble" is that soon the progra" runs out of ne& investors and "ost players lose the "oney they invested. Chain letter sche"es as! participants to send "oney to the na"es at the topof a list &ith the pro"ise that they &ill eventually receive thousands of dollars &hen their na"es co"e to the top. 8nsuspecting persons lose "oney every day on this illegal practice.

Ris31ree inestment o))ortunitieson the 'nternet offer fraudulent technological and e1otic invest"ents such as &ireless cable bogus securities or &orthless land. These invest"ents pro"ise to yieldfar greater returns than do co""only available invest"ent products. The ter" 7ris!#free7 is highly "isleading. Fe& consu"ers get their "oney bac! "uch less "a!e a profit.

Pum) and Dum) stoc3 mani)ulationson the 'nternet encourage investors to buy a particular stoc! &hich is usually little !no&n and lo& cost. The pro"oters "ay even advertise that they have insideinfor"ation. They "a!e their profit &hen consu"ers buy the stoc! or pu"p up the price and the pro"oters then pro"ptly sell or du"p their shares and the stoc! prices i""ediately fall. This sche"e canalso &or! in reverseH a short seller "a!es a profit &hen the price of the stoc! goes do&n.

'RO1(E!S W*TH *%TER%ET TR%SCT*O%S

T&o proble"s &ith 'nternet sales transactions are personal data privacy and verification that both buyers and sellers are authentic. Many consu"ers are concerned about the confidentiality of their personalfinancial infor"ation on the ?eb &ith good reason. ?hen you "a!e a purchase on the 'nternet your credit card nu"ber could fall into the &rong hands. 4ersonal data can be collected and organi+ed intodatabase files. ?hen you beco"e a part of an on#line service your personal data can be available to everyone in that syste". ?hile it is unli!ely that reputable "erchants &ould deliberately sell your datato others their database "ay be te"pting targets for hac!ers.


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Gerification that consu"ers are &ho they say they are can be solved by an electronic euivalent of a signature or a drivers license. A soft&are product currently used by "erchants ban!s and bro!eragehouses tells &ho the user is and &hat privileges he or she has. There is a gro&ing interest in credit card pay"ent syste"s that &ould safeguard credit card purchases on the 5et. Encryption soft&are canscra"ble your personal infor"ation so that it can be read only by the sender and the receiver. The proble" re"ains that personal data "ight still be available to certain e"ployees or hac!ers.

E1perts urge consu"ers to avoid dealing &ith 'nternet sites they are not fa"iliar &ith. Even &hen dealing &ith a &ell#!no&n business call the business directly to verify that the site e1ists. 't continues to bea ris!y business to give personal infor"ation including address and phone nu"ber credit card nu"bers social security nu"bers and ban! account nu"bers on the 'nternet.

'ROTECT*O% 0*%ST *%TER%ET )R$&

Most people find it hard to believe that they could beco"e victi"s of fraud but one should never underesti"ate the ingenuity of s&indlers &ho "a!e "oney by "isleading others. 6tate and federal la&s

and agencies have li"ited capacity to protect consu"ers fro" fraud on the 'nternet. The savvy consu"er "ust stay alert to the possibility of fraud. The 5ational Fraud 'nfor"ation Center offers thefollo&ing suggestions for side#stepping fraud on the 'nternet>

5ever reveal chec!ing account nu"bers credit card nu"bers or other personal financial data at any ?eb site or online service location ## unless you are sure you !no& &here this infor"ation &ill bedirected.?hen you subscribe to an on#line service you "ay be as!ed for credit card infor"ation. ?hen you enter any interactive service site ho&ever be&are of con artists &ho "ay as! you to 7confir"7 yourenroll"ent in the service by disclosing pass&ords or the credit card account nu"ber used to subscribe.8se the sa"e co""on sense you &ould e1ercise &ith any direct or telephone credit card purchase. A flashy professional 'nternet ?eb site does not guarantee that the sponsor is legiti"ate. 9no& theco"pany &ith &hich you plan to do business.

Report anything you see on the 'nternet that you suspect "ight be fraudulent. The 5ational Fraud 'nfor"ation Centers toll#free nu"ber is ;##K2#K2. Their "ailing address is 4.3. Bo1 2-2?ashington 0.C. $&&&.fraud.org

*our state 3ffice of the Attorney eneral is e"po&ered to investigate consu"er co"plaints including 'nternet co"plaints. They can give you infor"ation about any proble"s or concerns they haveencountered &ith the business.

The Better Business Bureau can tell you if there have been any co"plaints or inuiries about a business and ho& it &as resolved. 6o"e online advertise"ents &ill have a blue#seal that you can clic! on toconnect to the Better Business Bureau for a report on the advertisers trac! record. The online ?eb site for the BBB is http>&&&.bbbonline.org

The Federal Trade Co""ission enforces several consu"er protection la&s that are relevant to co"puter transactions such as false advertising and consu"er credit. 6uspicious actions on the ?eb &henreported to the 5ational Fraud 'nfor"ation Center are shared &ith the Federal Trade Co""ission and the 5ational Association of Attorneys eneral. 'n this &ay consu"ers Ioin &ith state and federalagencies in actions to curtail fraud on the 'nternet.

Although "any regulations and agencies have been established to protect consu"ers fro" fraud the principle of let the buyer be&are re"ains the consu"ers best protection. @egal protections are li"itedfraudulent activities flourish and once "oney is lost in a fraudulent sche"e the chances of getting it bac! are e1tre"ely s"all. A&areness of the possibility of fraud is your first line of defense.

The 'ndiana 0epart"ent of Financial 'nstitutions 0ivision of Consu"er Credit has "any other credit related brochures available . Call our toll#free nu"ber or &rite to the address on the cover for a copy of anyof our listed or for further consu"er credit infor"ation.


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"#T!R#!T


Documents

What is Electronic Bankidng Mini (1)