Practice Areas: Bank Fees

Electronic Funds Transfer Act

Congress passed the Electronic Funds Transfer Act "EFTA" in 1978. The law governs a wide range of financial activities, including wire transfers, electronic funds transfers, and ATM transaction fees. The Illinois Electronic Fund Transfer Act "IEFTA", which took effect in 1996, has similar provisions. These laws offer protections for consumers against exorbitant or hidden ATM fees, and they limit consumers' liability for unauthorized transactions if an ATM card is lost or stolen.

Bank Obligations Under EFTA

Banks may charge a fee for the use of its ATMs by consumers who do not have accounts at that bank. EFTA requires banks that do this to notify consumers of the amount of said fee twice. First, each machine's exterior must bear a notice that is visible even when the machine in use. Second, the machine must notify the consumer of the amount of the fee during the transaction, and give the consumer the option not to proceed.

With regard to lost or stolen ATM cards, the law limits a consumer's liability for unauthorized withdrawals or other transactions. The extent of the limitation of liability depends on when the consumer reports the lost card to the institution that issued the card. A bank must limit a consumer's liability to $50 if the consumer, within two business days of realizing the loss of the card, reports the loss to the bank. If the consumer reports the loss within sixty days of receiving a statement showing an unauthorized transaction, the bank must limit the consumer's liability to $500. If the consumer does not report the loss after sixty days expire, the consumer could lose all the money in the account.

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