Electronic Funds Transfer Act


DEFINITION of 'Electronic Funds Transfer Act'

A federal law that protects consumers engaged in the transfer of funds through electronic methods. This includes the use of debit cards, automated teller machines and automatic withdrawals from a bank account. The act also provides a means of correcting transaction errors and limits the liability from any losses due to a lost or stolen card.

BREAKING DOWN 'Electronic Funds Transfer Act'

This law was passed in 1978 as a result of the growth of electronic ATM machines and electronic banking. The use of paper checks has steadily declined since then, but the check served as hard evidence of payment. The explosion of electronic financial transactions created a need for new rules that would give consumers the same level of confidence that they had in the checking system. This includes the ability to challenge errors and correct them within a 60-day window, and to limit liability on a lost card to $50 if the card is reported as lost within two business days.

  1. Debit Card

    An electronic card issued by a bank which allows bank clients ...
  2. Consumer Liability

    The accountability put on consumers to not act in a negligent ...
  3. Electronic Money

    Electronic money is money which exists only in banking computer ...
  4. Credit Card

    A card issued by a financial company giving the holder an option ...
  5. Transfer

    A change in ownership of an asset, or a movement of funds and/or ...
  6. Wire Transfer

    An electronic transfer of funds across a network administered ...
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