Financial institutions: preauthorized electronic fund transfers.

Existing federal and state laws regulate certain aspects of electronic fund transfers, including, but not limited to, preauthorized electronic fund transfers from or to a consumer's checking account. Existing law requires the Department of Business Oversight to regulate various financial institutions operating within the state, including, but not limited to, banks and credit unions. This bill would require a financial institution subject to oversight by the Department of Business Oversight to ensure it complies with a specific federal regulation with regard to electronic fund transfers. This bill would require a financial institution to provide a specified written notice to a consumer, who approved a preauthorized electronic fund transfer to a merchant from the consumer's account, and would further require a merchant located in the state that accepts preauthorized electronic fund transfers to post the same notice on its Internet Web site, if any. This bill would require a financial institution, upon written notification from a consumer who terminated a preauthorized electronic fund transfer with a merchant, within 7 business days, to take action to ensure that the merchant no longer has the ability to withdraw funds from the consumer's account, based upon the consumer's instructions. This bill would prohibit a merchant from requiring payment for goods or services in the form of a preauthorized electronic fund transfer from a consumer's account at a financial institution, and would require a merchant to notify a financial institution, and cease making demands on a consumer's account, when the consumer's debt, payable by a preauthorized electronic fund transfer, has been satisfied.