What is electronic funds transfer? Why do banks like it? What provisions are in the law to protect the customer who uses electronic funds transfer?


EFT is any transfer of funds initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account. It includes: (1) automated teller machines; (2) point-of-sale systems; (3) direct deposit and withdrawal; (4) pay-by-phone systems; (5) personal computer (online) banking; and (6) wholesale wire transfers. Banks like EFTs because they don't have to handle all the paper and it eliminates the "float." There are laws to limit a customer's liability for unauthorized EFTs. The EFTA requires terms and conditions of EFTs to be disclosed. The bank must furnish receipts for transactions made at computer terminals. A periodic statement must be sent. Error resolution requirements are set forth by statute.

Business

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