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?
EFTs are any transfers of funds, other than transactions originated by check, draft, or similar paper instrument, initiated through an electronic terminal, telephone, or computer or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account. They include: 1. Automated Teller Machines (ATMs); 2. Point-of-Sale Systems (POS); 3. Direct Deposits and Withdrawals; 4. Pay-by-Phone Systems; 5. personal computer (online) banking; and 6. Wholesale Electronic Funds Transfers. Banks like EFTs because they don't have to handle all the paper and it eliminates "float" time between the writing of a check and final payment. There are laws to limit a customer's liability on his or her debit card. The amount depends on how soon they notify the bank after the card is lost or stolen. The bank must investigate a possible error on its periodic statement within 10 days. If it doesn't, it must return the disputed funds until the error is discovered. The bank must furnish receipts for transactions made at computer terminals. A periodic statement must be sent for every period in which there is an electronic transfer. Preauthorized transfers, such as for utility bills and insurance premiums, can be stopped three days before the scheduled transfer. Information must be given to the customer who opens an EFT account.
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