Definition of Electronic Fund Transfer Act

federal law enacted in 1978 providing the legal framework for Electronic Funds Transferinto, or out of, a consumer's bank account. These payments are not regulated by the Uniform Commercial Code, which limits its coverage of consumer payments to negotiable instruments, such as checks or drafts. The act specifies protections available to consumers sending or receiving funds electronically, and limits consumer liability for unauthorized transfer to $50, provided the bank is notified promptly. The act requires financial institutions to inform consumers of their financial rights under the act, provide written receipts of all electronic transfers, list transfers on an account statementand develop procedures for error resolution. These guidelines are implemented in Federal Reserve Regulation B.