When Is An Unauthorized Electronic Funds Transfer Claim Time Barred? Navigating Through Article 4A's Repose And Limitation Periods

Peter P. Hargitai is a lawyer based in Holland & Knight's Jacksonville office

If a bank accepts an unauthorized order, the bank must refund the payment to the customer with interest. The bank has a few key defenses, including that the customer failed to timely object to the order. This article focuses on the timing of the customer's objection. In order to preserve its claims, by when must the customer object to the disputed transaction or bring a lawsuit?

The vast majority of banking relationships include electronic funds transfers. If a customer provides instructions to its bank, either in person or electronically, to transfer money to another account by debiting that customer's account, the transaction likely qualifies as an electronic funds transfer.¹ Article 4A of the Uniform Commercial Code defines the duties, liabilities, and rights of parties to a funds transfer and displaces inconsistent common law remedies.²