Unauthorized withdrawals pose a significant challenge for businesses working with merchant payment processor companies, often leading to legal and financial issues. For businesses, unauthorized withdrawals can be financially devastating. Not only do they lose the withdrawn amount, but they also face additional fees and potential reputational damage. The impact extends beyond immediate financial losses, as businesses must divert resources to investigate and dispute these transactions, disrupting normal operations and potentially hindering growth.
The Sigal Law Group's experienced merchant processing litigators understand how overwhelming it can feel to pursue unauthorized withdrawals. As such, they will work diligently to ensure your business is protected from such legal issues. Contact the Sigal Law Group today for a free consultation.
Understanding Unauthorized Withdrawals
Merchant payment processors play a crucial role in the business ecosystem and bear significant responsibility. They are expected to implement robust fraud prevention measures and conduct thorough due diligence on their clients. Failure to do so can result in severe consequences, as evidenced by the CFPB's lawsuit against Intercept Corporation for enabling unauthorized withdrawals.
From a legal standpoint, businesses have protections under the Electronic Fund Transfer Act. This law limits consumer liability for unauthorized charges up to $50 and requires banks to investigate and resolve disputes within a specific timeframe. However, businesses must act quickly, as there's typically a 60-day window to report unauthorized transactions.
Best Practices for Mitigating Risks for Businesses and Merchant Processors
For merchant processors, the stakes are high. They must balance fraud prevention with maintaining a positive user experience for legitimate merchants. Overzealous policies can alienate valuable clients, while lax measures increase vulnerability to fraud and potential legal action.
Typically, unauthorized withdrawal disputes arise from:
- Contract breaches between businesses and merchant processors.
- Failures in fraud detection systems.
- Improper implementation of security measures.
- Disputes over liability for unauthorized transactions.
To mitigate these risks, Sigal Law Group advises both businesses and merchant processors to implement comprehensive fraud detection systems, create systems to clearly communicate policies and terms of service to all parties involved, maintain transaction records, and respond to suspicious activity quickly.
Working with the Sigal Law Group merchant processing litigators, business owners will better understand the legal landscape and have the tools to implement safeguards properly, minimizing the impact of unauthorized withdrawals. Contact our offices today for a free consultation.
