Electronic Fund Transfer Act
15 U.S.C. §§ 1693–1693rThe Electronic Fund Transfer Act governs electronic transfers to and from consumer accounts, including debit card charges, ACH transfers, and peer-to-peer payments. It sets the timelines that banks must follow to investigate errors and caps consumer liability for unauthorized transfers when they are reported promptly.
What It Covers
The EFTA applies to virtually every electronic transfer into or out of a consumer asset account, including debit card purchases, ATM withdrawals, ACH debits, preauthorized recurring transfers, and most peer-to-peer payments. It does not cover credit card transactions, which are governed instead by the Fair Credit Billing Act and the Truth in Lending Act. The statute's core protections are its error resolution procedures and its liability caps for unauthorized transfers.
When a consumer notices an unauthorized charge or other error on a bank statement, the EFTA requires the bank to investigate promptly. If the bank cannot complete its investigation within 10 business days (20 for new accounts), it must provisionally credit the account and continue investigating for up to 45 days. If the bank finds no error, it must explain its findings in writing and return the money, but the consumer is entitled to copies of the documents the bank relied on.
The liability caps depend on when the consumer reports the problem. A report within 2 business days of learning about the loss of a card or unauthorized transfer limits liability to $50. A report between 2 and 60 days after the statement was sent limits liability to $500. A report later than 60 days can expose the consumer to unlimited liability for transfers that would have been prevented by timely reporting. The statute is implemented by Regulation E at 12 C.F.R. Part 1005.
Key Provisions
- § 1693f Error resolution procedures, including the 60-day consumer notice window and the bank's 10-business-day investigation window (20 for new accounts), with provisional credit if the investigation extends.
- § 1693g Consumer liability caps for unauthorized transfers: $50 if reported within 2 business days, up to $500 if reported within 60 days, unlimited after.
- § 1693a(12) Defines an "unauthorized electronic fund transfer" and excludes transfers initiated by a person who had access with the consumer's permission.
- § 1693m Civil liability: actual damages, statutory damages of $100 to $1,000 for individuals (the lesser of $500,000 or 1% of net worth for class actions), and attorney's fees.
- 12 C.F.R. Part 1005 Regulation E: the implementing rules, including specific disclosure requirements and the written error notice procedures.