what is the electronic fund transfer act efta 
the electronic fund transfer act efta is a federal law that protects consumers when they transfer funds electronically including through the use of debit cards automated teller machines atms and automatic withdrawals from a bank account among other protections the efta provides a way to correct transaction errors and limits the liability resulting from a lost or stolen card understanding the electronic fund transfer act efta electronic fund transfers are transactions that use computers phones or magnetic strips to authorize a financial institution to credit or debit a customer s account electronic transfers include the use of atms debit cards direct deposits point of sale pos transactions transfers initiated by phone automated clearing house ach systems and pre authorized withdrawals from checking or savings accounts 1the efta outlines requirements for banking institutions and consumers to follow when errors occur under this act consumers can challenge errors have them corrected and receive limited financial penalties the efta also requires banks to provide certain information to consumers and defines how they can limit their liability in the case of a lost or stolen card 23the use of paper checks has steadily declined since the efta was passed but checks continue to serve as hard evidence of payment the explosion of electronic financial transactions created a need for new rules that would give consumers the same level of confidence as they have in the checking system 4this includes the ability to challenge errors correct them within a 60 day window and limit liability on a lost card to 50 if it is reported as lost within two business days if the institution is notified within three to 59 days of a lost card the liability could be as much as 500 and should it not be reported within 60 days the consumer isn t protected from liability at all meaning they could forfeit all funds in the associated account and be responsible for paying any overdraft charges 2history of the electronic fund transfer act efta congress passed the efta in 1978 in response to the growth of atms and electronic banking and the federal reserve board frb implemented it as regulation e the act established rules to protect consumers and defined the rights and responsibilities of all participants involved in transferring funds electronically the rule making authority of the efta eventually migrated from the federal reserve fed to the consumer financial protection bureau cfpb in 2011 following the enactment of the dodd frank wall street reform and consumer protection act 5you have the right to stop preauthorized transfers at any time regardless of any opposing contract terms 6services protected under the electronic fund transfer act efta basic services that are protected under the efta include 1efta requirements for service providersthe efta requires financial institutions and any third party involved in electronic fund transfer services to disclose the following information to consumers 7who does efta apply to efta applies to all persons including offices of foreign financial institutions in the united states that offer eft services to residents of any state it covers any account located in the united states through which efts are offered to a resident of a state no matter where a particular transfer occurs 8