Do you use a debit card to buy groceries or gas? Do you stop at an ATM to withdraw funds from your bank account? Have you relied on a mobile app to pay your friend for half of lunch? Do you prefer paying your bills online? Do you know what an Electronic Fund Transfer Act lawyer does or if you need one? 

A 2021 study by Business Insider revealed that 65% of Americans use mobile banking and almost 80% prefer electronic banking instead of visiting a bank in person. A survey performed by Ipsos-Forbes found 76% of US adults preferred using their bank’s mobile banking app while 97% of Millennials regularly used mobile banking in 2021.  

In response to the increase in electronic transfers, Congress enacted the Electronic Fund Transfer Act (EFTA) and Regulation E to protect consumers from unauthorized and fraudulent electronic transfers. Our EFTA lawyers are here to help if you are facing one of these situations.

What Situations are Covered by the Electronic Fund Transfer Act? 

Before 1978, the laws that dealt with banking transactions protected banks’ rights and obligations. Consumers had no recourse when money was taken from their accounts without their authority.  

As cybercrime and identity theft grew, consumers needed protection. The Electronic Funds Transfer Act (EFTA) was created to protect consumers who use electronic banking systems. The law is enforced by the Consumer Fraud Protection Bureau following Regulation E which provides a detailed explanation of the EFTA including which situations and entities are covered. 

Transfers Covered by the EFTA – Regulation E 

The EFTA only applies to certain electronic fund transfer (EFT) situations. The transfer must be unauthorized, involving an individual account, and electronic.  

“Unauthorized” EFTs have three elements: 

• The transfer must be made by someone other than the account holder 
• The person who makes the transfer does not have authority, and 
• The account holder receives no benefit. 

If you have voluntarily disclosed your PIN or given your ATM card to a trusted person and they transfer your money, those transfers will not be considered “unauthorized,” and the EFTA will not apply. 

TIP: If your relationship ends and you don’t want that person to have access to your account, you must tell your bank that you are withdrawing your authority for that person. You should also change your PIN or other access devices to ensure that person cannot make future transfers.  

The transfer must involve an individual account. To be protected under the EFTA, the account must be used for family, household, or personal purposes only. Commercial or business accounts are not covered by the EFTA.  

The transfer must be an Electronic Fund Transfer (EFT). Online banking transfers, bill-pay, mobile banking, payment apps, and other strictly electronic forms of moving money are covered by the EFTA. Transactions that do not fall under the act include: 

• Payment by check or other paper means, 
• Transfers, including wire transfers, between two businesses or two banks, 

• Transfers of money to buy commodities or securities, and 
• Transfers within the same bank if authorized by the account holder. 

How Does the Electronic Fund Transfer Act Protect Consumers? 

Before the EFTA, a consumer had no civil rights if someone removed money from their account without authority, even if the account holder was a victim of fraud or identity theft. Under the EFTA, consumers now have legal remedies including reimbursement of the transferred funds. 

If you discover an unauthorized transfer in your personal account and act quickly, you can limit your potential losses. In very general terms, the sooner you notify your bank about unauthorized transactions, the more protection you will receive.  

The law is complicated, but if you report a transfer within two business days of discovering a problem, your maximum liability is limited to $50. If you miss the two-day window but report the problem within 60 days from the date your account statement showing the transfer was sent, your potential liability is capped at $500. Beyond 60 days, you may lose a substantial amount of money depending on your specific circumstances.  

A Consumer’s Guide to the Electronic Funds Transfer Act provides detailed information, a handy chart to explain the different timeframes and liability potentials, as well as examples of how you can reduce your losses. 

How Can Consumer Protection Attorneys Help? 

Lawyers and law firms that focus their practice on Electronic Fund Transfer Act and Regulation E cases better understand the intricacies of the act and how to best protect consumers facing these situations. The experienced EFTA attorneys at Schlanger Law Group can explain: 

• Whether your situation qualifies for protection under the EFTA 

• How to properly notify your bank about an unauthorized EFT. At a minimum you should: 

• • put your notice in writing,  
  • include supporting documents,  
  • mail it by certified mail and request a return receipt, and 
  • keep copies of everything 

• What the bank must do upon receiving your notice and timeframes for:  

• • its investigation, 
  • reporting its investigation findings, 
  • correcting errors, and 
  • refunding your money 

• Whether you should receive a “provisional credit” while the bank investigates 
• Your rights if the bank violates the EFTA, and 
• Other details that relate to your case. 

Because every situation is different, you deserve an attorney who will listen to your story, create a solid legal strategy to protect your rights, help recover your stolen money, and force the financial institution to comply with the law.