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Understanding Preauthorized Electronic Fund Transfer: A Legal Overview
Definition & Meaning
A preauthorized electronic fund transfer is a type of electronic payment that a consumer agrees to in advance, allowing funds to be transferred from their account at regular intervals. This authorization must be provided in writing, and the consumer is entitled to receive a copy of this authorization. Consumers have the right to stop these transfers by notifying their financial institution either verbally or in writing, up to three business days before the scheduled transfer date.
Table of content
Legal Use & context
This term is commonly used in financial and consumer protection law. Preauthorized electronic fund transfers are relevant in various legal contexts, including banking regulations and consumer rights. Understanding this term is essential for consumers managing subscriptions, recurring payments, or any automated payments from their accounts. Users can often handle related processes themselves using legal templates from US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A consumer sets up a preauthorized electronic fund transfer to pay their monthly utility bill. They provide written authorization to their bank, which then automatically deducts the payment from their account each month.
Example 2: A user subscribes to a streaming service and agrees to a preauthorized electronic fund transfer for their monthly subscription fee. They can cancel the transfer by notifying their bank in writing three business days before the next payment is due.
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Requires additional disclosures for recurring transfers.
New York
Allows consumers to revoke authorization more easily.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Difference
Electronic Fund Transfer
A transfer of funds initiated electronically.
Preauthorized transfers are scheduled and agreed upon in advance.
If you have authorized a preauthorized electronic fund transfer and wish to manage it, ensure you have a written record of your authorization. If you need to stop a transfer, contact your financial institution in writing or verbally at least three business days before the next scheduled transfer. For assistance, consider using US Legal Forms' templates to create necessary documents.
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