My Bank Denied My Fraud Claim: What Are My Rights?

Reporting fraudulent activity to your bank does not always end the problem. Sometimes the bank refunds the money quickly. Other times consumers hear: “We determined the transaction was authorized.” Or: “Your claim has been denied.” Or simply: “There was no error.”

That can leave a consumer with an obvious question: if I did not make the transaction, how can the bank simply refuse to give my money back?

Federal law establishes procedures financial institutions generally must follow when consumers properly report certain electronic-transfer errors. Those rules come primarily from the Electronic Fund Transfer Act (EFTA) and Regulation E.

My Bank Refused to Refund an Unauthorized Transfer. What Can I Do?

A denial is not necessarily the end of the matter. Start by determining exactly why the bank denied the claim.

Under Regulation E, when a financial institution concludes that no error occurred, its report must include a written explanation of its findings and inform the consumer of the right to request the documents the institution relied upon. If the consumer requests those documents, the institution must provide them promptly.

That gives consumers an important next step: ask for the evidence. Do not settle for a vague statement such as “Our investigation determined the transaction was valid.” Ask what the bank actually relied upon. The records may include transaction information, account activity, device or access information, ATM information, merchant information, ACH records, or other materials relevant to the investigation.

What Does the Bank Have to Do After I Report Fraud?

Regulation E does more than simply allow a consumer to complain. After receiving qualifying notice of an error, a financial institution generally must promptly investigate, determine whether an error occurred within the applicable deadline, report its results, and correct an error if one occurred.

The regulation generally provides a 10-business-day investigation period. If the institution determines an error occurred, it generally must correct the error within one business day and report the results to the consumer within three business days after completing the investigation. If the bank cannot finish within that initial period, different procedures can apply.

How Long Does a Bank Have to Investigate an Unauthorized Transfer?

Generally, a bank has 10 business days after receiving a qualifying notice of error to investigate and determine whether an error occurred. But Regulation E allows additional time in certain circumstances.

A bank can generally extend the investigation to as long as 45 days if it provisionally credits the consumer’s account within the required period and follows the other procedures required by Regulation E. Certain types of transactions or newer accounts can have longer investigation periods. In many cases, this means consumers should not simply be left without the disputed funds for weeks while the bank investigates.

There are exceptions, including situations in which the institution properly requires written confirmation of an oral error report and does not receive it within 10 business days. That is another reason to carefully follow any written instructions the bank provides.

What Happens If My Bank Says an Unauthorized Transfer Was My Fault?

Banks sometimes point to consumer conduct when denying fraud claims. Perhaps the consumer clicked a link, credentials were compromised, or a PIN was exposed.

But Regulation E’s official interpretation specifically states that consumer negligence cannot be used to impose liability beyond what Regulation E permits. The CFPB gives the example of a consumer writing a PIN on a debit card: conduct that might be considered negligent under other law does not automatically eliminate Regulation E’s liability protections.

That does not mean every transaction must be reimbursed. The more important questions may include:

• Was the transfer actually authorized?
• Did the consumer receive a benefit from it?
• Did the consumer give someone authority to access the account?
• How quickly was the transaction reported?
• Did the bank comply with the error-resolution requirements?
• What evidence supports the bank’s conclusion?

The Bank Says I Authorized a Transfer That I Did Not Make. What Now?

Ask the bank to explain its conclusion in writing and request the documents supporting it. Then examine what the evidence actually proves.

For example, evidence that a transaction originated using valid account credentials may establish that the correct credentials were used. It does not necessarily answer every question about who actually used them or how they obtained them. Similarly, a transaction coming from a familiar device, IP address, merchant, or location may be relevant evidence, but the entire investigation should be evaluated in light of the actual facts.

The CFPB has stated that an investigation must be reasonable and has criticized practices in which financial institutions summarily denied disputes without considering other relevant information supplied by consumers.

Can a Bank Refuse to Reimburse Me for Fraud?

A bank can determine after an investigation that the transaction was authorized or that no qualifying error occurred. But it cannot simply ignore Regulation E’s error-resolution requirements when those requirements apply. When an error is established, Regulation E generally requires correction of that error, subject to the applicable consumer-liability provisions.

Whether reimbursement is required therefore depends on more than the consumer simply using the word “fraud.” The analysis can involve what type of transaction occurred, whether it qualifies as an electronic fund transfer, whether it was authorized, when the consumer reported it, whether another person had authority to access the account, what the bank investigated, and whether the bank followed Regulation E. That is why two consumers who both say “money was stolen from my bank account” can have legally different situations.

What If the Bank’s Investigation Seems Incomplete?

Request the documents used in the investigation and compare those records with what you actually told the bank. Preserve communications showing that you told the bank important facts such as:

• “I never made this transaction.”
• “I never gave this person permission.”
• “I still had my debit card.”
• “I did not recognize this recipient.”
• “This transaction occurred somewhere I was not.”
• “My account was accessed without my permission.”
• “Several unauthorized transactions occurred together.”

Regulation E’s official interpretation says that, depending on the circumstances, relevant bank records can include ACH transaction records, account transaction history, transaction location, information concerning the payee, and other information appropriate to resolving the claim. A financial institution may not always limit its review to payment instructions when other relevant information within its records could help resolve the dispute.

Can I Sue My Bank for Unauthorized Electronic Transfers?

Potentially, depending on the facts. The EFTA contains a civil-liability provision for certain failures to comply with the statute.

Federal law provides for potential actual damages and, in an individual action, statutory damages of $100 to $1,000. A successful consumer action can also potentially include costs and reasonable attorney’s fees.

In some cases, the EFTA allows a consumer to recover three times their actual damages (treble damages). That can apply, for example, when a bank failed to provisionally recredit the account within the required period and either did not investigate in good faith or had no reasonable basis for its conclusion, or when it knowingly and willfully concluded there was no error even though the evidence could not reasonably support that conclusion.

Timing matters here too. A lawsuit under the EFTA generally must be filed within one year from the date of the violation. The statute also contains defenses and limitations that can affect whether a claim may be brought.

That does not mean every denied bank-fraud claim creates a lawsuit. A lawyer evaluating a potential EFTA matter may need to determine:

• What transaction actually occurred?
• Was it covered by EFTA and Regulation E?
• Was it authorized or unauthorized?
• When did the consumer notify the bank?
• What did the bank do after receiving notice?
• Did the investigation comply with Regulation E?
• What explanation and documents did the bank provide?
• What financial harm resulted?

Those details determine whether a dispute is simply frustrating or whether there may be a legal violation.

Do Not Throw Away the Bank’s Denial Letter

A denial letter may become one of the most important documents in the case. Keep the original dispute, claim confirmation numbers, bank statements, transaction records, letters, emails, screenshots, text alerts, investigation results, documents the bank relied upon, police or identity-theft reports, and records showing when each communication occurred.

The timeline matters. The investigation matters. And what the bank says it relied upon can matter.

The Bottom Line

If you reported an unauthorized electronic transaction and your bank denied the claim, the important question is not simply “Did the bank say no?” The more useful questions are: Why did the bank say no? What evidence did it rely on? Did it conduct the investigation required by Regulation E? Did it follow the applicable deadlines? And was the transaction actually authorized?

A bank’s fraud department may make the first decision, but that does not necessarily determine whether the bank complied with federal law.

How Rahman Legal Can Help

Rahman Legal represents New York and Massachusetts consumers in disputes involving unauthorized bank transfers, identity theft, and credit reporting. If your bank denied your claim, we can review your original dispute, the bank’s written explanation, the documents it relied on, and your timeline. Because EFTA claims generally must be filed within one year, it helps to act promptly. Contact Rahman Legal to request a consultation. No outcome is guaranteed; every matter is evaluated individually.

Frequently Asked Questions

How long does my bank have to investigate an unauthorized transfer?

Generally 10 business days after it receives your notice. The bank can take up to 45 days (longer for certain transactions and new accounts) if it provisionally credits your account within that first period and follows Regulation E’s other requirements.

Can I see the evidence my bank used to deny my claim?

Yes. If the bank decides no error occurred, it must give you a written explanation and tell you that you can request the documents it relied on. If you ask, it must provide them promptly.

Can my bank deny my claim because I was careless?

Negligence alone cannot be used to make you liable for more than Regulation E allows. The real questions are whether the transfer was authorized, how quickly you reported it, and whether the bank investigated properly.

How long do I have to sue my bank under the EFTA?

An EFTA lawsuit generally must be filed within one year from the date of the violation, so it is important to act promptly if your claim was denied.

This article provides general information and is not legal advice. EFTA and Regulation E claims depend heavily on the facts, timing, type of transfer, and communications between the consumer and financial institution.

Reviewed by Hashim Rahman, Esq.

Primary References

• CFPB Regulation E § 1005.11 – Error Resolution
• CFPB Official Interpretation of § 1005.6
• CFPB Electronic Fund Transfer FAQs
• 15 U.S.C. § 1693f – Error Resolution
• 15 U.S.C. § 1693m – Civil Liability