Massachusetts

The following rules apply only to entities other than banks and credit unions, which are subject to Regulation E. [Massachusetts Gen. Laws Ann., Ch. 167B, Section 1]. For all institutions, however, the consumer’s liability for unauthorized transfers is a maximum of $50. [Massachusetts Gen. Laws Ann., Ch. 167, Section 2I(3)]

Please be sure you have read State-Law Rules the Affect Electronic Funds Transfers before proceeding. The introduction describes the limitations of the following summary.

Restrictions on the issuance of access devices

An institution may only issue an access device (such as an ATM card) in response to a request or application, or as a renewal of a previously accepted device. The identity of the person to whom the device is issued must also be verified. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 6]

Required options

An institution offering electronic funds transfer services must offer consumers the option of limiting the amount of cash that can be withdrawn each day from an electronic branch. The institution must also offer the option limiting access through an electronic branch to one or more specified accounts. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 6A]

Conditioning Loans

The institution may not require, as a condition on the granting of a loan, that the consumer agree to repay with electronic payments. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 7]

Disclosures

The institution must give disclosures before the consumer contracts for the electronic funds transfer service. The disclosures must include the following:
  1. The consumer’s liability for unauthorized transfers and a notice of the advisability of prompt reporting of any loss or theft of the access device.
  2. Telephone numbers and addresses of contacts to be used by the consumer to report unauthorized transfers and to make inquiries or complaints.
  3. The type and nature of transfers which the consumer may make, plus limitations on the frequency or dollar amount of the transfers.
  4. Charges for transfers and account maintenance.
  5. The minimum balance, if any, needed for using an access device.
  6. The rate of interest to be paid on an account used for electronic funds transfers.
  7. The consumer’s right to stop payment of preauthorized withdrawals and the procedure for doing so.
  8. The consumer’s right to receive documentation of transfers.
  9. A summary of error resolution procedures.
  10. The financial institution’s liability for failing to make required electronic funds transfers.
  11. The circumstances under which the financial institution will disclose information concerning the consumer’s account to third persons.
  12. A statement that documentation of transfers is admissible as evidence of the transfer and is prima facie proof that the transfer was made.
  13. The financial institution’s business days.
  14. An explanation of the manner in which the consumer may terminate the agreement.
  15. The fact that certain transfers from the account will eliminate the consumer’s ability to stop payment, plus a statement to that effect as spelled out in the statute.

Any changes in these terms adverse to the consumer must be preceded by 30-days’ notice to the consumer of the change.

[Massachusetts Gen. Laws. Ann., Ch. 167B, Section 8]

Documentation of transfers

Institutions must supply documentation of individual transfers made through an electronic branch or point-of-sale terminal. They must also supply notice of periodic credits (direct deposits) to the consumer’s account if the payor does not. Institutions must also provide periodic statements to consumers. The statute spells out the information that must appear on these forms of documentation and the timing requirements. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 9]

Preauthorized withdrawals

Before an institution may make a preauthorized withdrawal out of a consumer’s account, the institution must obtain an authorization from the consumer to do so. The authorization form must contain disclosures relating to when the withdrawals will be made, the consumer’s right to revoke the authorization, the procedure for revoking, the limiting amount, and the consumer’s right to notice of a deficiency. The consumer is also entitled to a notice of a variation in the withdrawal amount and may elect to receive notice only if the variation exceeds an agreed upon amount. The consumer may stop payment of a preauthorized withdrawal by notifying the institution at any time—up to three business days before the scheduled date of the transfer. Finally, if the institution does not make a transfer because the consumer’s account does not contain sufficient funds, the institution must send a notice of that fact to the consumer on or before the next business day. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 10]

No waiver of rights

Consumers may not waive any rights that are granted to them under the electronic funds transfer statutes of Massachusetts. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 11]

Restricted use of the consumer’s social security number

The institution may not use the consumer’s social security number as a file number or personal ID number. However, the institution may use the number to help verify the consumer’s identity. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 14]

Limits on releasing of information about transfers

The institution is generally prohibited from releasing information about a consumer’s electronic funds transfers. However, there are a number of exceptions relating to disclosures necessary to comply with court subpoenas and orders, audits, etc. If an unauthorized release occurs, the financial institution must notify the consumer of the release within three days. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 16]

Billing-error procedures

Institutions are subject to billing error procedures and consumers are entitled to the error resolution remedies in accordance with Regulation E. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 17]

Consumer liability for unauthorized transfers

Consumers are liable up to a maximum of $50 for unauthorized transfers that occur before the consumer notifies the institution of the loss or theft of the consumer’s access device. The consumer will be liable for this $50 only if the issuer of the access device has given notice of the consumer’s potential liability. [Massachusetts Gen. Laws. Ann., Ch. 167B, Section 18]

Financial institution liability

The institution is liable for all damages proximately caused the consumer by the institution’s failure to properly execute a transfer on behalf of the consumer. An institution that fails to comply with the provisions of the electronic funds transfer statutes of Massachusetts (e.g., fails to provide required disclosures) can be liable for the consumer’s actual damages plus additional damages as awarded by the court, plus attorneys’ fees. [Massachusetts Gen. Laws. Ann., Ch. 167B, Sections 19 and 20]