About The Electronic Fund Transfers Act (EFTA)
The purpose of the Electronic Fund Transfers Act (EFTA) is to provide a basic framework establishing the rights, liabilities and responsibilities of participants in electronic fund transfers.
Definitions And Processes
Electronic funds transfers are transfers of funds through an electronic terminal, by phone, computer or magnetic tape – essentially any transfer of funds other than by a check or another paper instrument. For example, you may be:
- Ordering bill-pay through a bank
- Making a payment through a debit card
- Providing a creditor with your bank account information to allow a transfer
- Making a fund transfer at an ATM machine.
All of the above are examples of electronic fund transfers (EFTs).
The EFTA by statute can be found at 15 U.S.C. §1693. Its primary objective is to provide individual rights to consumers. EFTA contains provisions regarding the necessary authorizations for permitting an electronic funds transfer, the setting of terms and conditions for making transfers and the means by which errors, such as unauthorized transfers, are resolved.
Even cryptocurrencies are covered by EFTA.
Authorization Is Required For Electronic Fund Transfers
Any preauthorized electronic funds transfer must be confirmed by the consumer in writing. A copy of that agreement must be provided to the consumer. However, the following required elements must apply:
- A “preauthorized electronic funds transfer” is defined as one that is authorized in advance to recur at substantially regular intervals.
- A single payment made by way of electronic transfer does not have to be authorized in writing.
- Only regular, interval payments – like a monthly payment arrangement – falls under EFTA.
- If the amount of the payment at each interval varies – a different amount to be included in each payment – then the payee shall give written notice to the consumer prior to each payment.
Basically, if you are going to set up a monthly payment arrangement with a creditor that allows the creditor to take money directly from your checking account, that creditor must get written authorization from you to do so. Just recording a telephone conversation is not enough. Also, if the amount of the payment is going to be different from one month to the next, then you are entitled to advance written notice of each transfer.
Let Us Hear From You If Something Went Wrong
If the bank made an error or did not get your authorization to make regular payments and you experienced financial hardships as a result, our attorneys can look into it for you.