Implications of the Electronic Funds Transfer Act of 1978: Background and Structure

Abstract

On Nov. 10, 1978, President Jimmy Carter signed a lightly amended version of House Resolution 14279 into law. Days later, Rhode Island’s Fernand St. Germain made clear its primary purpose: the modernization of the existing bank regulatory system. Tucked within this bill lay the Electronic Funds Transfer Act of 1978 ("EFTA").

The product of a lengthy academic and political debate, the EFTA represented Congress’s first stab at the supervision of a then-nascent sector of the national and global economy, creating a comprehensive federal legal framework to govern the rights, liabilities, and responsibilities of both consumers and providers of electronic fund (or funds) transfer services. Substantially amended only once, much of this statutory edifice has remained unchanged, engendering little significant controversy or extensive judicial dissection in the last 40-plus years.

Perhaps predictably, over that same time span, the EFTA’s reach has swelled as more commerce has migrated onto the worldwide web and stumbled into its domain. Some explanation may be in order for the countless entities subject to the EFTA’s often anachronistic provisions.

As the first part of a two-part series, the second of which has been concurrently uploaded onto the author's SSRN page, this short prefatory article outlines the EFTA’s extant blueprint, noting its historical and doctrinal underpinnings, and sketches the considerations central to the federal judiciary’s interpretive approach to this statutory enactment. The second article in the series will specify the potential defenses available to financial institutions and the issues that all parties should be prepared to address from a case’s very beginning.

Note: Reproduced with permission from Published Jun. 14, 2019. Copyright 2019 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com.

Keywords: EFTA, textualism, purpose, holistic, consumer protection, standing, bona fide error, electronic funds, electronic transfers, 1693e

JEL Classification: K00, K1, K10, K12, K13, K19, K20, K21, K22, K23, K29, K3, K30, K40, K41, K42, K49