What Is the Electronic Funds Transfer Act (EFTA)?

The Electronic Funds Transfer Act (EFTA), enacted in 1978 and commonly sometimes referred to as “Regulation E”, is a federal law protecting consumers who use electronic methods to transfer money. The EFTA covers transactions such as ATM withdrawals, debit card purchases, direct deposit, online bill payments, pre-authorized withdrawals, and popular digital payment apps like Zelle, Venmo, CashApp and PayPal. The law ensures that consumers are notified of their rights, can dispute unauthorized or erroneous charges, and limit their financial exposure in the event of fraud or mistakes.

EFTA Protections and Covered Transactions

The EFTA applies to most consumer banking accounts and covers:

  • Debit card and ATM transactions
  • Point-of-sale (POS) purchases
  • Automated Clearing House (ACH) transfers
  • Direct deposits and preauthorized withdrawals
  • Person-to-person (P2P) transfers with payment apps (Zelle, Venmo, CashApp and PayPal)
  • Unauthorized transfers, including those resulting from fraud or scams

Business accounts are generally excluded; EFTA protections focus on consumer accounts.

Transfers Not Covered by the Electronic Funds Transfer Act (EFTA)

The EFTA applies only to specific types of electronic transfers. Certain transactions fall outside its protections, including:

  • Internal transfers within the same financial institution when approved by the account holder.
  • Payments made by check, since paper checks already serve as verifiable records of payment.
  • Business-to-business or bank-to-bank transfers, such as wire transfers.
  • Transactions involving gift cards, prepaid calling cards, or credit cards.
  • Transfers used for purchasing securities or commodities.

Timelines: Notifications, Deadlines, and Statute of Limitations

Understanding EFTA deadlines is critical to protecting your rights:

  • Reporting Unauthorized Transfers: You must report unauthorized charges within 60 days of your bank sending the statement that first lists the error. If you report within 2 business days, your liability is capped at $50. If you report between 3 and 59 days, your liability can be up to $500. If you wait longer than 60 days, you may be responsible for all resulting losses.
  • Bank’s Response Timeline: Once you’ve reported an error, your bank has 10 business days to investigate. If more time is needed, they can take up to 45 days but must provisionally credit your account within those initial 10 business days while the investigation continues.
  • Statute of Limitations: Any lawsuit under the EFTA must be filed within one year of the violation.

How EFTA Lawsuits Work

If your bank or other financial institution fails to comply with EFTA protections—such as not investigating a timely reported error, refusing to reimburse you for unauthorized charges, or violating disclosure requirements—you have the right to file suit in federal court. Procedures generally include:

  • Asserting the violation and describing the harm or losses
  • Presenting evidence of unauthorized transactions and your timely notice
  • Pursuing damages allowed under the law
  • In appropriate cases, consumers may file class action suits against institutions with widespread violations.

Damages a Consumer Can Recover Under an EFTA Lawsuit

The EFTA provides several types of remedies:

  • Reimbursement for Unauthorized Transfers: You are entitled to the return of funds removed without authorization, including overdraft charges and related fees
  • Actual Damages: This includes all financial losses resulting from the institution’s failure—such as late fees, bounced checks, and even damages for emotional distress in certain cases.
  • Statutory Damages: Even if you cannot show actual losses, you may recover between $100 and $1,000 per violation for individual actions.
  • Treble (Triple) Damages: If the bank willfully fails to meet its error resolution deadlines—such as not provisionally crediting funds within 10 business days—you may be awarded three times your actual damages.
  • Attorney’s Fees and Costs: If you prevail, the court can order the violating institution to pay your reasonable attorney’s fees and litigation costs, making legal relief accessible.
  • Class Action Damages: In class actions, damages for the class are capped at the lesser of $500,000 or 1% of the defendant’s net worth.1

How Nahoum Law Can Pursue Your EFTA Claim

If you’ve been affected by unauthorized electronic fund transfers or a bank’s refusal to help, you may have strong rights under the EFTA. As an experienced consumer protection law firm, Nahoum Law can help you:

  • Determine whether your situation is covered by the EFTA
  • Ensure all deadlines and notices are met
  • Maximize your financial recovery, including statutory and punitive damages
  • File suit against banks or payment companies when necessary

Contact Nahoum Law today for a free evaluation of your EFTA claim. Safeguard your finances and enforce your rights under federal law.