Define: Electronic Funds Transfer Act

The Electronic Funds Transfer Act is a federal law that establishes the rights and liabilities of consumers and financial institutions regarding electronic funds transfers, such as ATM withdrawals, debit card transactions, and direct deposits.

The EFTA covers various electronic funds transfers, including point-of-sale transactions, automated clearinghouse transfers, and transfers initiated through telephone or computer.

Consumers have the right to receive certain disclosures regarding electronic funds transfers, such as fees, error resolution procedures, and liability limits. They also have the right to dispute unauthorized transactions and receive prompt investigation and resolution.

Financial institutions are required to provide clear and conspicuous disclosures to consumers, maintain error resolution procedures, investigate and resolve unauthorized transactions promptly, and limit consumer liability for unauthorized transfers.

Yes, financial institutions can charge fees for certain electronic funds transfers, but they must disclose these fees to consumers before the transaction is completed.

If you believe there is an error in your electronic funds transfer, you should notify your financial institution promptly. They are required to investigate and resolve the error within a certain timeframe.

Generally, consumers are not liable for unauthorized electronic funds transfers if they promptly notify their financial institution. However, there are certain exceptions, such as if the consumer acted negligently or contributed to the unauthorized transfer.

Yes, consumers have the right to cancel pre-authorized electronic funds transfers by notifying their financial institution at least three business days before the scheduled transfer.

Yes, the EFTA limits a consumer’s liability for unauthorized transfers made with a lost or stolen debit card to a maximum of $50 if the loss is reported within two business days. If reported after two business days, the consumer’s liability can increase up to $500.

Financial institutions can change the terms of the electronic funds transfer agreement, but they must provide consumers with written notice at least 21 days before the effective date of the change. This allows consumers the opportunity to cancel the agreement if they do not agree with the new terms.