What is the Electronic Funds Transfer Act?

The Electronic Funds Transfer Act (EFTA) is a federal law that was enacted in 1978 to protect consumers from fraudulent electronic transfers of funds from their bank accounts. EFTA applies to electronic transfers of funds from one financial institution to another, such as an ATM transaction, electronic bill payment, or direct deposit. The law requires financial institutions to provide consumers with disclosure documents that explain their rights and responsibilities relating to electronic fund transfers. These documents must be given to consumers before any electronic transfers are made. Under EFTA, banks and other financial institutions must provide consumers with information about their rights to dispute and stop payment on certain transactions, their rights to receive a receipt for each transaction, and their right to receive information about their account balance. The law also requires financial institutions to provide errors resolution notices to consumers if they find a discrepancy between what they were charged and what they should have been charged. EFTA gives consumers the right to dispute electronic transfers if they feel they were unauthorized. Consumers can also stop certain electronic transfers from their accounts if they believe the transfer is fraudulent. Overall, EFTA provides consumers with valuable protection from fraud and mismanagement of their funds. It requires financial institutions to disclose important information and provides consumers with the right to challenge possibly fraudulent transfers.

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What is the Electronic Funds Transfer Act?

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