The Electronic Funds Transfer Act (EFTA), enacted in 1978, is a federal law in the United States that governs consumer electronic funds transfers (EFTs) and establishes the rights and liabilities of consumers, financial institutions, and other parties involved in these transactions. The primary objective of the EFTA is to protect consumers engaging in electronic funds transfers, ensuring they are provided with accurate and complete disclosures regarding the terms and conditions of these transactions.
Under the EFTA, an electronic funds transfer refers to any transfer of funds initiated through electronic terminals, telephones, computers, or magnetic tape, that is either directly or indirectly initiated by the consumer, or is credited or debited to the consumer's account. The act enumerates certain regulations and requirements that banks and financial institutions must follow when handling such transactions. These include disclosure obligations to consumers, error resolution procedures, liability protections, and record-keeping requirements.
The EFTA mandates that consumers must be provided with clear and concise disclosures related to electronic funds transfers, such as fees, terms, and conditions. It requires institutions to investigate and resolve any reported errors or unauthorized transactions promptly. Additionally, the law protects consumers from liability for losses resulting from unauthorized transactions when reported promptly.
Overall, the Electronic Funds Transfer Act aims to ensure fair and transparent dealings between consumers and financial institutions in the realm of electronic funds transfers, promoting the secure and efficient use of electronic payment systems.
