Key takeaways
– The Electronic Fund Transfer Act (EFTA) is a U.S. federal consumer-protection law (implemented as Regulation E) that governs electronic fund transfers (EFTs) and sets disclosure, error-resolution, and liability rules for consumers and financial institutions.
– Covered transfers include ATM and debit card transactions, point-of-sale (POS) transactions, direct deposits, ACH transfers, telephone-initiated transfers, and preauthorized withdrawals.
– Consumers have the right to dispute errors and receive resolution; they must generally notify their financial institution within 60 days of the statement showing an error.
– Liability for unauthorized use of a debit card is limited (commonly $50 if reported within two business days, up to $500 if reported within 60 days); after 60 days a consumer may have no EFTA protection.
– Financial institutions must provide disclosures, error‑resolution procedures, and certain notices (and in many cases must provisionally recredit disputed amounts pending investigation).
What is the EFTA?
The Electronic Fund Transfer Act (EFTA), enacted by Congress in 1978 and implemented as Regulation E, establishes consumer protections and responsibilities for electronic fund transfers (EFTs). EFTs are transactions that debit or credit an account electronically—via ATM or debit card, POS, direct deposit, ACH, telephone transfers, or preauthorized automatic withdrawals. The law gives consumers rights to clear information about electronic-account terms, a process to dispute errors, and limits on liability for unauthorized transfers.
A brief history and regulatory authority
– Enacted: 1978 in response to rapid growth of ATMs and electronic banking.
– Implementing regulation: Regulation E (originally enforced by the Federal Reserve).
– Rulemaking authority: Transferred to the Consumer Financial Protection Bureau (CFPB) after Dodd-Frank (2011).
(Primary regulatory text and guidance: CFPB Regulation E)
Who and what the EFTA covers
– Who: Consumers with accounts in the United States (includes U.S. residents using accounts located in the U.S.; foreign bank offices in the U.S. offering EFT services to U.S. residents are also covered).
– What: Electronic fund transfers that debit or credit consumer accounts, including:
– ATM withdrawals and deposits
– Debit card purchases and POS transactions
– Preauthorized transfers (e.g., recurring bill payments, subscription withdrawals)
– Direct deposits (payroll, government benefits)
– ACH transfers and telephone-initiated transfers
Consumer rights under the EFTA (summary)
– Disclosures: Banks and EFT providers must disclose terms, fees, error-resolution procedures, and liability rules before the consumer’s first electronic transfer (and in certain periodic statements).
– Error resolution: Consumers can dispute errors; providers must investigate and respond within Regulation E timeframes.
– Liability limits for unauthorized transfers: Tiered limits depending on how quickly the loss/theft is reported (see “Lost or stolen cards” below).
– Right to stop preauthorized transfers: Consumers may stop, revoke, or change authorization for recurring transfers (providers may require written confirmation within a short period).
– Receipts and periodic statements: Financial institutions must provide transaction receipts and periodic statements with EFT details and dispute instructions.
EFTA requirements for service providers (banks, credit unions, processors)
– Provide required disclosures (account terms, fees, error procedures) and written notices for preauthorized transfers.
– Make available receipts for ATM and POS transactions.
– Maintain and make available an error-resolution process consistent with Regulation E (including acknowledgment and investigation timeframes).
– Limit consumer liability for unauthorized transfers consistent with Regulation E rules and provide provisional credit when appropriate during investigations.
– Honor consumer requests to stop preauthorized transfers when provided in time and in the required form.
Important timelines and procedures (practical summary)
– Consumer notice deadline: Generally, you must notify the financial institution within 60 days after the institution sends the periodic statement showing the error or unauthorized transfer.
– Institution acknowledgment: The institution must acknowledge your error report promptly—Regulation E requires that it investigate and generally must either correct the error or explain why the account is correct within its prescribed timeframes.
– Investigation timeframes: Typical Reg E timeframes are:
– The bank must generally complete its investigation within 45 days of notice and correct errors.
– For new accounts, point-of-sale transactions, and foreign-initiated transfers, the investigation may extend up to 90 days.
– If the investigation cannot be completed within 10 business days, the bank must generally provisionally recredit your account for the amount in question (subject to specific rules and exceptions).
– Written confirmation: If you report an error orally, the bank may require that you send written confirmation within 10 business days. If the institution does not receive the written confirmation, it may have fewer obligations under some circumstances. (See Regulation E §1005.11)
Does EFTA set ATM withdrawal limits?
– The EFTA does not set a specific dollar cap for ATM withdrawals. It requires that institutions disclose limits and terms, and many banks set daily cash withdrawal limits (commonly $200–$300, though some banks allow higher limits). Check your account disclosures for your bank’s specific limit.
Lost or stolen cards — consumer liability rules (Regulation E highlights)
– Reported within two business days after learning of loss/theft: maximum liability is $50.
– Reported after two business days but within 60 days after the bank mailed the statement showing the unauthorized transfers: liability may be up to $500.
– Not reported within 60 days after the statement was mailed: you may be liable for all unauthorized losses (i.e., no EFTA protection).
Note: These are statutory caps under Reg E. Some banks offer lower or zero liability in practice; many card networks and issuers have consumer-friendly zero-liability policies for fraud if the consumer notifies them promptly.
Practical steps — what to do if something goes wrong
A. If your debit/ATM card is lost or stolen
1. Contact your financial institution immediately (phone and any emergency toll-free numbers). Ask them to block or freeze the card and to issue a replacement.
2. Report the theft/loss to your bank in writing if the bank requests written confirmation (send by certified mail and keep a copy).
3. Document dates, times, names of people you spoke with, and confirmation numbers.
4. File a police report if funds were stolen or if required by your bank.
5. Monitor account activity and statements carefully for later suspicious transactions.
B. If you see an unauthorized or incorrect transaction on your statement
1. Act quickly—notify your financial institution as soon as you notice the error and no later than 60 days after the periodic statement was mailed showing the problem.
2. Make the initial report (many banks have a phone number for reporting errors/fraud). Ask whether the bank needs a written follow-up and, if so, send it within 10 business days (include account number, date and amount of disputed transaction, and a brief explanation).
3. Keep copies of all communication and any evidence (receipts, transaction records).
4. If the bank’s investigation takes longer than 10 business days, ask whether you will receive provisional credit while it investigates.
5. If your dispute is not resolved to your satisfaction, you can escalate to the bank’s complaint office, file a complaint with the CFPB, or consider contacting your state banking regulator or an attorney.
C. How to stop or revoke preauthorized (recurring) transfers
1. Contact your financial institution and ask to stop preauthorized transfers to a named payee. Provide the name of the payee, amount (if known), and the date of the next scheduled transfer.
2. If requested, provide written confirmation. Financial institutions commonly require written confirmation within 14 days of an oral stop-payment request.
3. Verify with the merchant/payee that the authorization has been canceled to avoid continued attempts to debit your account.
4. Keep records and monitor your account for any subsequent debits.
D. Best practices to minimize risk
– Use credit cards for online purchases when possible (credit cards have stronger dispute protections for purchases).
– Enable account alerts (email/text/push) for transactions.
– Check statements promptly each month and reconcile receipts.
– Use bank-issued cards with EMV chips and use secure connections for online banking.
– Keep contact numbers for your bank and card issuers in a secure place for quick action.
Sample timeline/checklist for consumers (if you spot an unauthorized transaction)
1. Immediately: Call your bank to report the unauthorized transfer or lost/stolen card.
2. Within 10 business days: If the bank asks, send written confirmation of the error/dispute.
3. Within 60 days: Make sure your initial notice was received—if you waited longer than 60 days after the statement was mailed, you may lose EFTA protections.
4. During investigation: Track provisional credits and follow up until the bank resolves the dispute (45–90 days maximum under Regulation E in most cases).
When to escalate outside the bank
– If the bank fails to follow Regulation E timeframes, refuses to investigate, or denies your dispute without explanation, you may:
– File a complaint with the Consumer Financial Protection Bureau (consumerfinance.gov/complaint).
– Contact your state’s banking regulator or the FDIC (if your institution is FDIC-insured).
– Consider legal advice if significant funds are at stake.
The bottom line
The Electronic Fund Transfer Act gives consumers important protections for electronic transfers, including required disclosures, an error-resolution process, and limits on liability for unauthorized transfers—provided you act promptly. Read your account disclosures, monitor statements carefully, report problems quickly (and follow up in writing when requested), and use the practical steps above to preserve your rights under the EFTA/Regulation E.
Selected sources and further reading
– Consumer Financial Protection Bureau (Regulation E, 12 CFR Part 1005): https://www.consumerfinance.gov/rules-policy/regulations/1005/
– CFPB — Procedures for Resolving Errors (Regulation E, §1005.11): https://www.consumerfinance.gov/rules-policy/regulations/1005/11/
– CFPB — Liability of Consumer for Unauthorized Transfers (Regulation E, §1005.6): https://www.consumerfinance.gov/rules-policy/regulations/1005/6/
– Federal Trade Commission — Lost or Stolen Credit, ATM, and Debit Cards: https://www.consumer.ftc.gov/articles/0214-lost-or-stolen-credit-atm-and-debit-cards
– FDIC — Electronic Fund Transfer Act overview: https://www.fdic.gov/regulations/resources/consumers/efta/
– Investopedia — Electronic Fund Transfer Act (for general background): https://www.investopedia.com/terms/e/electronic-funds-transfer-act.asp
If you want, I can:
– Draft a template letter you can send your bank to dispute a transaction, or
– Walk through a specific example (e.g., unauthorized ATM withdrawal) and create a step‑by‑step action plan with exact wording for phone and written reports. Which would you prefer?