Electronic Fund Transfer Act (Consumer Rights)

Author: Noah Gomez

Published: 3 December 2023

Under the Electronic Fund Transfer Act (EFTA) you have certain rights with regards to disclosures, changes to terms & conditions, paper trail, error resolution, fees, and responsibility for unauthorized transactions. It's a lot, but it's important.

Scope of Transactions

Any transfer of funds, other than "a transaction originated by check, draft, or similar paper instrument." This includes ATMs, credit cards, debit cards, transactions initiated by phone, or any other electronic terminal (§1693a. 7). The legislation only applies to transactions by consumers, not businesses or other legal entities.


  • Institutions must disclosed terms and conditions at the time of the initial contract.
  • It must be written in plain language.
  • It must include:
    • Consumer liability for unauthorized transfers
    • Contact information
    • The type and nature of admissible transfers
    • Any charges for transfers
    • Consumer right to stop per-authorized transfers
    • Consumer right to receive documentation of transfers
    • A summary of error resolution provisions of the Act
    • The financial institutions liability
    • When, how, and why the financial institution may disclose consumer transfer information to third parties
    • Specific fees associated with using ATMs
  • Changes to terms & conditions must be communicated at least 21 days before they become effective.


Financial institutions must provide documentation of transfers that include, at a minimum, the following information.

  • Amount
  • Types of transfer
  • Consumer transferring account ID
  • Receiving account ID
  • The location of the terminal used

The financial institution must provide periodic statements of activity on consumers' accounts with the information above, as well as:

  • Amount of any fees
  • Total balances
  • Contact information of the financial institution

Some consumer accounts are still paper-based, also known as "passbook." For theses accounts institutions can provide notice in writing in alternative frequencies.

Error Resolution

Consumers must notify their institutions within 60 days of a suspected error. S/he must communicate:

  • The account ID
  • The error and amount
  • Reasoning

The institution has 10 days to investigate and communicate its findings. If it determines an error more quickly, it must communicate this in no more than 1 day. It must also credit the account for the discovered error.

If the institution requires more than 10 days, it must provide a provisional credit to the account within 10 days, then adjust later.

If it finds no error, the institution must communicate this within 3 days, including all documentation used to come to this conclusion.

Importantly, if the institution misses the 10 day timeline or unreasonably denies the error complaint, the consumer is entitled to additional damages, called "treble."

Errors include:

  • Unauthorized transfers
  • Incorrect transfers
  • The omission of a transfer on a periodic statement
  • Computational errors
  • Consumer receipt of an incorrect amount
  • Requests for additional information
  • Others defined by the Consumer Financial Protection Bureau

Consumer Liability

In short, consumers are only liable for unauthorized transactions if they did not authorize the transfer OR provide access to another person who could authorize the transfer.

This may sound obvious, but it's easy to imagine costly situations. For example, a parent who provides account access to his/her child would be responsible for an unauthorized transfer the child makes.

The financial institution always bears the burden of proof to establish consumer liability.

Financial Institution Liability

Financial institutions are responsible when they fail to make a transfer, except when the account has insufficient funds or is blocked for legal reasons. That said, if the account has insufficient funds due to the institution's error, they remain liable.

To be clear, fraud by a third party is not directly governed by the EFTA, but in most cases it belongs to the party "in the best position to prevent the fraud” (Beau Townsend Ford Lincoln, Inc. v. Don Hinds Ford, Inc., 759 Fed. Appx. 348, 354 (6th Cir. 2018)).

The CARD Act and Dodd-Frank Acts significantly amended the EFTA.

Nice to Know, Thanks

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About the Author

Noah Gomez (founder of Thick Credit) is a transatlantic professional and entrepreneur with 3+ years experience in consumer finance education. He also has 5+ years of experience in corporate finance, including debt financing, M&A, listing preparation, US GAAP and IFRS.

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