How to Understand the Electronic Fund Transfer Act

Passed in 1978, the Electronic Fund Transfer Act was created to protect consumers in issues concerning the electronic transfer of funds.

Things You'll Need

• Computer with Internet access

Instructions

1. Know that under the Electronic Fund Transfer Act, you have the right to request a receipt for all electronic fund transfers. Your bank statement must also reflect all electronic fund transfers made to and from your account.

2. Understand that once you've reported an error, in most cases, the financial institution has 45 days to address it. In cases that concern new accounts (those opened within the past 30 days) as well as foreign and point-of-sale transactions, the institution has 90 days to resolve the issue.

3. Be aware that disputed funds must be put back in your account by the financial institution within 10 business days after the commencement of the investigation, regardless of whether the investigation has been completed. In cases involving new accounts, the institution is given 20 business days to replace the funds.

4. Remember that you must receive written notification when the investigation has been completed. If no error has been found, the financial institution is required to clearly explain why it believes this to be the case. The law entitles you to request and receive copies of all documents used during the investigation.

5. Understand that you may have grounds to sue if you feel your rights have been violated. Contact an attorney with experience in consumer law for assistance.

6. Protect yourself from electronic fund transfer errors and fraud by regularly checking your bank statement for discrepancies.

7. Gain further insight regarding the Electronic Fund Transfer Act by visiting the Federal Reserve Board Web site (see Resources, below).

Tips & Warnings

• Understand what types of activities are considered electronic fund transfers. Transactions conducted via automated teller machines qualify, as do point-of-sale transactions. Preauthorized transfers, in which funds are automatically deposited or withdrawn from an account, also qualify. Finally, telephone transfers, in which bills are paid or funds transferred from one account to another via telephone, also fall within this category.

• If you believe you've been the victim of an electronic fund transfer error, you must contact your financial institution within 60 days of the first statement showing the error in order to be protected by the Electronic Fund Transfer Act. In your correspondence, note the nature of the error as well as the date and dollar amount involved.

• Report unauthorized withdrawals on an electronic funds transfer card such as a debit card immediately. A delay could increase your liability.