What is the Electronic Funds Transfer Act?

The Electronic Funds Transfer Act (EFTA) is a federal law enacted by the United States Congress in 1978. The EFTA provides protection to consumers who use electronic means to transfer funds from one financial institution to another. This law applies to electronic transfers such as those made via Automated Clearing House (ACH), Direct Deposit, debit cards, and ATM transactions. The EFTA is designed to ensure the accuracy and reliability of electronic transfers by establishing a code of conduct for the entities involved in the transactions. This includes providing consumers with certain rights and protections with regard to their funds. For example, the law requires financial institutions to immediately credit or debit the appropriate funds when a transaction is made. The EFTA also mandates financial institutions to promptly rectify any errors that may occur in an electronic transaction. The financial institution must resolve inaccuracies related to the amount, source, or destination of funds within 45 days from when the customer first noticed the error. Additionally, the EFTA limits certain fees that could be charged in connection with electronic transfers and requires consumers to be provided with certain disclosure notices when a transaction is conducted. Overall, the Electronic Funds Transfer Act was passed to ensure financial security and accuracy when transferring funds electronically. It provides protection to consumers by providing certain rights and protections, establishing a code of conduct for financial institutions, and requiring the prompt rectification of any errors.

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What is the Electronic Funds Transfer Act?

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