Electronic Funds Transfer Act

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Consumer Liability

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

    Electronic money is money which exists only in banking computer ...
  3. Wire Transfer

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

    An electronic card issued by a bank which allows bank clients ...
Related Articles
  1. Debit Card Fraud: Is Your Money At Risk?
    Credit & Loans

    Debit Card Fraud: Is Your Money At Risk?

  2. Should You Pay In Cash?
    Budgeting

    Should You Pay In Cash?

  3. The Nordic Model: Pros and Cons
    Economics

    The Nordic Model: Pros and Cons

  4. Material Adverse Effect A Warning Sign ...
    Markets

    Material Adverse Effect A Warning Sign ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center