Overview of the Electronic Funds Transfer Act

The Electronic Funds Transfer Act is legislation that deals with the process of electronic funds transfers. Most of the banking system today deals with electronic funds transfers instead of paper checks. Here are the basics of the Electronic Funds Transfer Act and what it tells consumers.

Electronic Funds Transfer Act

The Electronic Funds Transfer Act is legislation that was passed in 1978. This legislation was passed in order to govern over the growing number of transactions that occurred through electronic funds transfers. Electronic funds transfers can include any number of types of transactions. For example, when you use your debit card to purchase something or to get cash, you are using an electronic funds transfer. When you pay one of your bills through an automatic debit, you are using this process as well. Another way that you can access an electronic funds transfer is by doing an over-the-phone transaction with a merchant.

Proof

One of the big issues with electronic funds transfers was that many people worried whether they would be able to get proof of the transactions. When you write a check, you are able to keep a copy of the canceled check as proof that you wrote it. According to the Electronic Funds Transfer Act, you are able to get a receipt for your transactions. This allows you to get some type of proof that you conducted a transaction in this manner.

Correcting Errors

Another area that is covered by the Electronic Funds Transfer Act is the correction of errors. This system is not foolproof, and it has been known to create some errors. If you find an error in your bank statement, you can potentially correct it by taking the proper steps.

If there is some type of error, you need to make sure that you contact your financial institution as quickly as possible. You need to contact them in writing or over the phone within 60 days of finding the mistake. After 60 days, you will no longer be able to fix the mistakes. Once you tell your financial institution about the mistake, they have up to 45 days to investigate the problem. If it takes them longer than 10 days, they are supposed to put the amount of money that is in question back into your account while they finish conducting their investigation. 

Loss or Theft

With an electronic funds system, there is always the risk that your debit card could be lost or stolen. If that happens, the Electronic Funds Transfer Act sets forth some rules on these matters as well. If you notice that your card is lost or stolen, you need to notify your financial institution within two business days. If you do this, you are going to be responsible for only a maximum of $50. If you tell them before 60 days, your maximum loss will be $500. If you wait longer than that, you are responsible for whatever is lost.


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