Types of Funds Transfers Excluded from EFT Limitations

C

The Electronic Fund Transfer Act (EFTA) establishes the rights, liabilities, and responsibilities of participants in electronic fund transfer (EFT) systems. The Consumer Rights and Electronic Fund Transfers Rule, which implements the EFTA, provides consumers with certain protections, including limitations on liability for unauthorized electronic fund transfers.

Specifically, the EFTA limits a consumer's liability for unauthorized EFTs to $50 if the consumer notifies the financial institution within two business days after learning of the loss or theft of the access device (e.g., card, code, or other means of accessing the account). If the consumer fails to notify the financial institution within two business days but does notify the institution within 60 calendar days after receiving a periodic statement showing unauthorized transfers, the consumer's liability is limited to $500.

The question asks which type of funds transfers is NOT included in the protections provided by the EFT limitations on liability for unauthorized electronic fund transfers.

Answer A, Point-of-sale transfers, is included in the protections provided by the EFT limitations on liability for unauthorized electronic fund transfers. Point-of-sale transfers occur when a consumer uses an electronic terminal to authorize a transfer of funds at the time of purchase.

Answer B, Automated teller machine (ATM) transfers, is also included in the protections provided by the EFT limitations on liability for unauthorized electronic fund transfers. ATM transfers occur when a consumer uses an ATM to authorize a transfer of funds.

Answer C, Transfers initiated by Fax, is not included in the protections provided by the EFT limitations on liability for unauthorized electronic fund transfers. Transfers initiated by fax are not electronic fund transfers as defined by the EFTA.

Answer D, Withdrawals of funds, including merchant transactions where no electronic terminal is involved, if the customer's account is debited, is included in the protections provided by the EFT limitations on liability for unauthorized electronic fund transfers. This includes transactions where a consumer authorizes a transfer of funds without using an electronic terminal, such as by writing a check that is converted into an electronic fund transfer.

In summary, the correct answer is C, Transfers initiated by Fax, as it is not included in the protections provided by the EFT limitations on liability for unauthorized electronic fund transfers.