EFT stands for Electronic Funds Transfer and the EFTA stands for the Electronic Funds Transfer Act of 1987. The impetus behind the EFTA 1978 was to protect individuals engaging in electronic fund transfers. The EFTA 1978 is enforced through ‘Regulation E’ which is a Federal Reserve Board.
Features of the EFTA 1978
The Electronic Funds Transfer Act came into force in the U.S in 1978 on approval of the U.S Congress. The main purpose for passing the EFTA was to ensure that the rights and responsibilities associated with all parties to an electronic funds transfer were established under law. The Electron Funds Transfer Act 1978 covers all EFT activities from ATM’s and POS terminals to ACH systems and remote banking programs.
The Act provides scope for both the individual customers and the financial institution. Under the EFTA where a customer wishes to declare an error in payment, the customer is required to notify the financial institution immediately in writing or orally and provide their name and account number. The customer must detail what the error is, the amount of money transacted falsely and the date it occurred.
Financial institutions on the other hand are required to investigate all errors swiftly and provide a solution to the error within a period of 45 days. Where the investigation into an error of transaction is deemed to take more than 10 business/working days, the amount of money in question must be re-credited to the individuals account. Not all transactions are covered by the EFTA 1978 and it is important to read the Act to ascertain whether you are protected or not. An example of unprotected activities is store gift cards.