There are three basic types of electronic funds transfers (EFTs). The most familiar type is the disbursement of cash or transfer of funds initiated by the consumer at an automated teller machine. Other types are the preauthorized electronic transfer of funds into or from an account that the consumer has authorized in advance, and transfer of funds resulting from debit card transactions. [See 12 CFR §§205.2(g), 205.3(b).] Consumers are increasingly using preauthorized transfers to receive deposits of paychecks and to make regular monthly payments to service providers when the payment amount varies little from month to month, e.g., health clubs, insurance companies, etc.
EFTs are regulated by the federal Electronic Fund Transfer Act [15 USC §§1693 et seq] and Federal Reserve Board Regulation E [12 CFR Pt 205]. The Act and Regulation E define the rights and obligations of both consumers and financial institutions with respect to EFTs and transfers resulting from debit card transactions. Consumers cannot waive the protections of the Act and Regulation E. [15 USC §1693l.]