CFPB EFT FAQ Error Res Unauth EFTs 1 – What is an unauthorized EFT?

Compliance > Regulation E - EFTA
Q:  What is an unauthorized EFT?
 
A:   An unauthorized EFT is an EFT from a consumer’s account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit. 12 CFR 1005.2(m). Unauthorized EFTs include transfers initiated by a person who obtained a consumer’s access device through fraud or robbery and consumer transfers at an ATM that were induced by force. Comments 2(m)-3 and 4.
 
The term unauthorized EFT does not include an EFT initiated through any of the following means:
 
(1) By a person who was furnished the access device to the consumer's account by the consumer, unless the consumer has notified the financial institution that transfers by that person are no longer authorized. 12 CFR 1005.2(m)(1). This exclusion does not apply to transfers initiated by a person who obtained a consumer’s access device through fraud or robbery. Comment 2(m)-3;
 
(2) With fraudulent intent by the consumer or any person acting in concert with the consumer. 12 CFR 1005.2(m)(2); or
 
(3) By the financial institution or its employee, 12 CFR 1005.2(m)(3).
 
 
This Q&A was contained in the CFPB’s Electronic Fund Transfers FAQs that were updated in December 2021 (which may be updated from time to time).  This may be found on the CFPB’s website here:  https://www.consumerfinance.gov/compliance/compliance-resources/deposit-accounts-resources/electronic-fund-transfers/electronic-fund-transfers-faqs/
 

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