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Simple English definitions for legal terms
Electronic Funds Transfer Act
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A quick definition of Electronic Funds Transfer Act:
The Electronic Funds Transfer Act (EFTA) is a law that helps protect people when they use electronic banking and financial services like debit cards, electronic withdrawals, transfers, and deposits. It was made in 1978 to make sure people can trust electronic payments and to help them if there are mistakes or fraud. The law says that banks have to let people dispute wrong financial statements and give them information about their rights and responsibilities. If there is fraud, people have to tell the bank within a certain time to not be held responsible for the money. The law helps people feel safe when they use electronic money.
A more thorough explanation:
The Electronic Funds Transfer Act (EFTA), also known as Regulation E, is a law that protects consumers who use electronic banking and financial services. These services include debit card transactions, electronic withdrawals, transfers, and deposits. The EFTA was created in 1978 to establish trust and predictability among consumers using electronic methods of payments where errors or fraud occur.
The Act requires financial institutions to:
- Allow consumers to dispute incorrect financial statements
- Provide detailed information regarding the duties, rights, and liabilities of the consumer and institution regarding electronic fund transfers
- Specify means of resolving disputes between the consumer and institution
If fraud occurs, the Act requires consumers and financial institutions to communicate the fraud within certain timeframes to receive limited liability for the transaction. For example, if a fraudulent transaction is reported within 2 days, the consumer will only be held liable for $50. If reported within 60 days, the consumer will be held liable for $500. After 60 days, the consumer may be held liable for an unlimited amount.
Overall, the Electronic Funds Transfer Act provides important protections for consumers who use electronic banking and financial services.