The Electronic Funds Transfer Act (EFT Act)
Nowadays, money is constantly transferred electronically. It was only a few decades ago when passing funds off via the web or ATMs was a foreign idea to mos. But today, most people send and receive payments electronically.
The Electronic Funds Transfer Act was signed into legislature in 1978 to protect the rights of consumers and clarify the rules involved in transferring funds electronically.
This law is aimed specifically at the exchange of money via ATMs, banks, computers, telephone or any electronic terminal.
What are the Benefits of the Electronic Funds Transfer Act
How has the Act protected you? Here are a few of the elements of the Electronic Funds Transfer Act that have standardized the way we transfer electronically and how it provides clarity to us all.
There Must Be a Clear Fee Notification
When making a transaction electronically, if there is ever a fee associated with that transaction, you should be notified.
You notice this especially when taking a withdrawal at an ATM and a notification appears stating the fee amount that will be charged to your account if you proceed.
Prior to this act, the fee was not prominently displayed or very clear to the consumer. This allows you a choice on whether you want to go through with the transaction and pay that fee.
There Must Be Full Disclosure
When transactions are passed to a consumer’s bank account, there is a required link to the terms and conditions.
The language within these terms must be clear and comprehensible.
All fees, important dates, contact information and instruction on how to stop payment must be outlined.
In addition to this, all financial institutions are required to supply the consumer with a log of all transactions as well as periodic statements, either electronically or via the snail mail.
You Are Protected If the Bank Makes an Error
The Electronic Funds Transfer Act also protects the consumer in the event of any error by the institution. This can include but is not limited to:
- failure to stop payment when correct procedure was followed
- mistakes made during processing
- failure to credit an account
Written Authorization is Required Before Electronic Transfers Are Allowed
Banks and other forms of financial institutions must receive written consent from the consumer before setting up and processing any electronic transfer.
On the contrary, any stop payment can be done both in written form or verbally, which may later be authorized via a letter. The consent is necessary to avoid any type of identity theft.
With Technology Comes Risk
As you can see, it’s very important to know our rights when transferring money to and from accounts. We all want to protect the thing that we work so hard for – our money.
This law has been put in place to make sure that errors and scams are kept to a minimum.
To review the law in its entirety, visit the FDIC’s page about the EFT Act.