Federal legislation known as the Electronic Fund Transfer Act (EFTA) safeguards customers when they transfer money electronically, particularly when using debit cards, ATMs, and automatic bank account withdrawals. The EFTA minimizes the liability resulting from a lost or stolen card in addition to offering a method to repair transaction errors.
Electronic fund transfers are transactions that allow a financial institution to credit or debit a customer’s account using computers, mobile devices, or magnetic strips. The usage of ATMs, debit cards, direct deposits, POS transactions, transfers started over the phone, automated clearing house (ACH) systems, and pre-authorized withdrawals from checking or savings accounts are all examples of electronic transfers.
When mistakes happen, customers and banking institutions must adhere to certain rules laid down by the EFTA. Customers may contest inaccuracies under this law, have them corrected, and obtain minimal financial penalties. The EFTA also specifies how banks can minimize their liability in the event of a lost or stolen card and mandates that they disclose specific information to consumers.