The Electronic Fund Transfer Act was passed by the U.S. Congress in 1978 and signed by President Jimmy Carter, to establish the rights and liabilities of consumers as well as the responsibilities of all participants in electronic funds transfer activities. The act's provisions were implemented through Federal Reserve Board Regulation E.

Rights of consumers

The EFT Act recognizes the right of consumers to choose the financial institution to which their payments are directed The EFT Act also prohibits a creditor or lender from requiring a consumer to repay a loan or other credit by electronic fund transfer, except when there is an overdraft on checking plans.

Financial institution liability

The financial institution must give the customer notice of his liability in case the card is lost or stolen. This notice must include a phone number for reporting card loss and a description of the financial institution's error resolution process.

Limit to customer liability on loss or her of card

If a customer promptly reports a missing or stolen card to the financial institution before any unauthorized transactions occur, the cardholder will not be held responsible for subsequent transactions. A customer can be liable for unauthorized withdrawals if their card is lost or stolen and they do not follow certain criteria:

EFT errors

EFT is not a perfect system; therefore customers should still be diligent in reviewing their EFT statements for possible errors as they would with any other type of transaction. Should a customer notice that there has been an error in an electronic fund transfer relating to their account certain steps must be taken: Under the Act, the customer must: Under the Act, the financial institution must:

What the EFT Act Covers