The Electronic Fund Transfer Act (EFTA) (sometimes referred to as "Regulation E") is the federal law that protects consumers engaged in the transfer of funds electronically, including via a debit card, automated teller machine (ATM) or automatic bank account deposit or withdrawal. The EFTA spells out the rules governing debit card and other electronic transactions and what a consumer's rights are if there are billing errors or other issues.
For consumers, the EFTA is substantially weaker than the Fair Credit Billing Act (FCBA), which governs credit card transactions. For example, while the FCBA limits your liability for unauthorized transactions on a credit card to $50, the EFTA limits your liability to $50 only if you notify the bank or credit union within two business days of your debit card being lost or stolen. If you don’t notify the financial institution within two days, but you do notify them within 60 days, you could lose up to $500. And if you don’t provide notification within 60 days of receiving a statement showing the unauthorized transaction(s), you could be liable for all unauthorized activity. For this and other reasons (the right to dispute undelivered purchases, for example), consumers who shop online should use a credit card.
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