Electronic Fund Transfer Act - What The EFT Act Covers

What The EFT Act Covers

• The EFT Act does not apply to all preauthorized plans. The EFT Act does not apply to automatic transfers from any account held in the name of the institution the consumer uses to the account the consumer uses.
  • An example of this would be where the EFT Act would not apply to any automatic payments put towards a mortgage held by the financial institution where a consumer would hold their electronic funds account.
• The EFT Act would also not apply to automatic transfers among a consumer’s account at a specific financial institution.
• The EFT Act also does not cover all transfers. Some banks, other financial institutions, and vendors will produce cards with a cash value imprinted into the card itself.
  • Examples of these include public transit passes, store gift cards, and prepaid telephone cards. These cards may not be covered by the EFT Act.
• When using electronic funds transfer, the Act does not give the consumer the right to stop payment.
• State law or any contract that imposes a lower liability limit than those mentioned in the “Loss or Theft: Customer Liability” will be preempted (overridden) by the federal EFT Act unless the state law provides protections that are greater than that provided under Federal law. (See Section 919 of the Act).