Electronic Fund Transfer Act

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 (90 days for new accounts, point-of-sale debit card transactions, and transfers not initiated within a state). If the bank finds no error, it must explain its findings in writing and may reverse the provisional credit, 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 after learning of the loss or theft of a card or other access device limits liability to the lesser of $50 or the unauthorized transfers that occur before notice. A later report raises the limit to the lesser of $500 or the sum of up to $50 for transfers in the first 2 business days plus the transfers after that which the bank establishes would not have occurred with timely notice. Separately, if the consumer does not report an unauthorized transfer that appears on a periodic statement within 60 days after the bank transmits the statement, the consumer can be liable for later transfers that the bank establishes would not have occurred had notice been given within that period. These time limits are extended to a reasonable period when the delay is due to extenuating circumstances, such as extended travel or hospitalization (12 C.F.R. § 1005.6(b)(4)). 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, with provisional credit if the investigation extends to 45 days. Regulation E at 12 C.F.R. § 1005.11(c)(3) sets a 20-business-day window for accounts new within 30 days of the first deposit, and extends the outer investigation limit to 90 days for new-account transfers, point-of-sale debit card transactions, and transfers not initiated within a state.
• § 1693g Consumer liability caps for unauthorized transfers: $50 or less if reported within 2 business days after learning of the loss or theft of an access device; up to $500 if reported later; and, for an unauthorized transfer on a statement not reported within 60 days, liability for later transfers that the bank establishes timely notice would have prevented. These time limits are extended for extenuating circumstances such as extended travel or hospitalization.
• § 1693a(12) Defines an "unauthorized electronic fund transfer" and excludes, among others, transfers by a person the consumer furnished with the card, code, or other means of access, unless the consumer has told the bank that transfers by that person are no longer authorized.
• § 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.

Damages and Deadlines at a Glance

Articles on This Statute

Related Practice Areas & Resources