Electronic Fund Transfers

In the Electronic Fund Transfer Act and its interpretive Regulation E, the Federal Reserve Board is given the flexibility to adapt to changes in the area. Regulation E gives a rather broad and uncertain definition of an electronic fund transfer, although intra-family transfers have now been exempted. Disclosures are required to be readily understandable, and to be made prior to the first transaction. Although pre-existing non-modifiable terminals are exempted from the requirement, all others are required to produce a receipt. Some problems may arise with the requirement of notice of preauthorized transfers to accounts, and the requirement of a writing authorizing preauthorized transfers from accounts. Among the most complex provisions of the Regulation are those relating to provisional recrediting. By examples, the complex liability system has been clarified. The Board has proposed to interpret the unauthorized use provisions in apparently inconsistent ways which shift losses to the card issuer. There are still important differences between the Electronic Fund Transfer (EFT) Act and the Truth in Lending Act, so there may be some difficulties with cards used for both credit and EFT unless sensible amendments can be drawn. Unfortunately, the Board has not faced the questions which arise when multiple laws affect the same transaction. Overall, the EFT Act has not been in effect long enough to permit an assessment of the viability of its policies, but it is hoped that the Board will continue to adapt to the evolving field.