Comparative Study of Consumer Protection Rights Relating to ‎Preauthorized Debits, in Iranian and American Legal Systems

Document Type : Research Paper

Authors

1 Department of Private Law, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran‎

2 Department of Law, Faculty of Administrative Sciences and Economics, University of Isfahan, ‎Isfahan, Iran

3 Department of Law, Faculty of Law and Humanities, Isfahan (Khorasgan) Branch, Islamic Azad ‎University, Isfahan, Iran

10.22059/jcl.2023.356146.634481

Abstract

The development and facilitation of new payment manners for transactions according to the current business requirements is an integral part of economic dynamics and it is closely related to the banking laws. Preauthorized debit, also known as Direct Debit, is one of the most common banking payment methods available to users worldwide, especially in case of recurring transfers. Its flexibility and safety are grounded in the agreement between the account holder and the beneficiary, who is mostly the creditor. A contract of adhesion applies to the case in many ways, and the account holder (the consumer of goods and services) as the weaker party should be legally supported. However, the lack of comprehensive regulations to specify the parties' framework of rights and duties, especially concerning the adhesive nature of this type of contract, is what has to a great extent slowed down the use of this common and widely used method in internal transactions. With the development of the internet banking system, a specific regulation has been introduced into the American legal system to support holders of consumer bank accounts against beneficiaries who are mainly vendors. Since these rules conform to the Iranian law in many ways, studying them can be constructive. Therefore, the present paper attempted to analyze the most important aspects of this issue in both legal systems.

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References

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Comparative Law Review
Volume 14, Issue 2
Autumn $ Winter 2023-2024
January 2024
Pages 883-911

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