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Electronic Fund Transfer Act - What Does it Specify?
Electronic Fund Transfer Act - An Overview
The Electronic Fund Transfer Act aims at providing protection against intentional errors in Electronic fund transfer statements and rectifying errors in such statement even if it is inadvertent. For an ordinary consumer, EFT definition is synonymous with electronic banking as having round the clock access to cash through an Automated Teller Machine (ATM) or direct deposit by electronic methods.
This substitutes our day to day paper checks and paper transactions of any kind. EFTA is initiated using cards or codes authorizing the customer to access his account at any time. Barring a few specified EFT electronic fund transfers, the Electronic Fund Transfer Act regulates all such transactions. The Electronic Fund Transfer Act and Regulation aims at regulating the records of EFT transactions, correction of errors, theft and fraud, mail solicitations for debit cards, and EFT services.
Applicability of EFTA
The EFTA applies to all types of electronic fund transfers barring a few. Such electronic fund transfer may involve automatic teller machines (ATM), point-of-sale debit transactions, and other electronic banking transactions. We may sum up the applicability of the EFT processing as follows:
- In cases where a consumer is charged for funds transfer which neither he nor any of his acquaintances have made.
- In cases where the statement of accounts provided is incorrect.
- Arithmetical and clerical error occurring in the statement.
- Omissions in posting of transactions already executed.
- In cases where bills are not sent to the current address of the consumer.
- In cases where the consumer has asked in writing for any clarification or has dispute the charges he is asked to pay and has claimed that the bills are erroneous.
Area of Operation of EFTA
In case of errors detected
When a customer detects an error in the electronic fund statement provided to him by the financial institution, he must immediately notify the institution indicating the details of such error. But there is a time limit of sixty days. Any intimation beyond that period shall be fruitless as the financial institution is at liberty under the EFTA to ignore such intimation. On receipt of a notification within the specified time limit the financial institution will have ten days time to investigate and one more day to intimate the results to the complaining customer. They may extend the time limit up to 45 days if they refund the amount disputed forthwith to the account of the customer and can only take back after conclusion of the investigation and only if it is found that there was no error in the billing.
Error detection in point-of-sale purchase
Such purchases are made with a debit or credit card. The provider financial institution comes up with a periodical statement indicating the use of the card by you. In case any error is detected then the same EFT (electronic funds transfer) error correction procedure as in case of other transactions will be followed. The only exception is that on immediate deposit of the disputed amount in your account, the financial institution can extend the time limit of investigation up to 90 days and can take back the money if no error is found with a written explanation to the customer.
Lost or stolen ATM or Debit cards
When a credit card is stolen, the maximum loss to the customer will not exceed $50. But when a debit card or ATM card is stolen the loss can be huge. You have to be very prompt in reporting any such loss or stealing of these cards to avoid such huge loss. If you report within 48 hours, the loss will be limited to a maximum of $50. If you report between 2 to 60 days, the loss may be $500. If you report beyond that, the loss may be irreparable. However, if the state law or the specific contract under which the customer obtained such cards provides for a higher time limit for reporting or lower limits for loss, in such cases, the state law or contract provisions will be applicable and not the provisions in the federal law.
Limited stop-payment privileges
EFT Act does not allow stop-payment in case of electronic fund transfer. You have to resolve it yourself. However, only in cases where funds are regularly transferred to a third party from your account on pre-authorized instructions, payments can be stopped by you on oral or written instructions. However, an oral instruction is required to be followed with written instruction within 14 days. However, individual financial institutions may allow higher power to their customers under special contracts on stop payment option.
Continue to: EFTA and Preauthorized Plans
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