EFT (Electronic Fund Transfer)

An Electronic Fund Transfer (EFT) is defined in the Electronic Fund Transfer Act (EFTA), 15 U.S.C. 1693a(7), as any transfer of funds initiated through an electronic terminal, telephone, or computer that orders, instructs, or authorizes a financial institution to debit or credit a consumer account. The definition covers debit card transactions at point of sale, ATM withdrawals, ACH direct debits and credits, and phone-initiated transfers.

Regulation E (12 CFR 1005) implements the EFTA and governs all EFTs to or from consumer deposit accounts. The consumer rights under Reg E flow from the EFT definition: only if a transaction qualifies as an EFT does the consumer have Reg E error-resolution and liability protections.

Debit card transactions are EFTs. Credit card transactions are not EFTs; they are credit extensions governed by Regulation Z. This definitional boundary is the source of most credit-vs-debit protection differences. The Reg E error-resolution right (12 CFR 1005.11) applies to EFTs only. Merchant disputes for goods or services not delivered are not EFT errors under the statutory definition.

Practical implications for consumers: - A debit card swipe at a retailer is an EFT from your checking account. If the transfer is incorrect (wrong amount, transfer not initiated by you), you have a Reg E error claim. - If the transfer is correct but the merchant failed to deliver goods, the EFT was correctly executed. No Reg E error. Your recourse is contractual with the merchant or via voluntary network chargeback rules. - ACH debits (direct billing from checking account) are also EFTs. You can stop an ACH preauthorized payment under Reg E 12 CFR 1005.10(c) by notifying your bank at least 3 business days before the scheduled transfer.