Electronic funds transfers (EFTs) are faster, more efficient, and less expensive than paper check transactions. They are also said to be safer and more secure. Many individuals, however, question whether or not EFT transactions are as safe as they are cracked up to be.
First, it is important to realize that no payment or collection system is 100% safe. There is always the potential, no matter how small, for things to go wrong. Errors are possible, and foul-ups occur, even with the most advanced technologies in place. That said, many experts assert that EFT offers an extremely high level of security. In fact, EFT transactions are considered to be far safer than dealing with paper checks.
Each year, an untold number of checks are lost in the mail. This is one risk that is immediately eradicated through the use of EFT transactions. There is nothing to be mailed, and therefore, nothing to lose. EFT transactions also help to reduce the risk of check fraud.
With an EFT transaction, you are required to reveal sensitive information to the business or organization with which you are making the transaction. This information may include bank account and routing numbers, as well as your home address and phone number. Without question, providing this information to the wrong parties is a recipe for disaster. As long as you limit yourself to providing this information to merchants and organizations you trust, however, your confidential information should be perfectly safe.
To ensure your safety in EFT transactions, it is wise to take certain precautions. When sending information via the Internet, do so only with websites that offer secure encryption technology. If the company you are dealing with doesn’t offer this level of protection, you would be wise to find another way to make or receive payment.
Be sure to carefully review your bank statements each month, checking for errors. If you spot errors or suspicious activity, report it to your financial institution right away. Your liability for erroneous transactions may be limited, as long as you report the problem within a reasonable time frame. For example, in the United States, consumers are liable only for the first 50 US Dollars (USD) of a fraudulent EFT transaction, provided that it is reported within two days of receiving a bank statement listing the transfer.
If you wait to report problems after that two-day period, your liability goes up. Consumer liability is capped at 500 USD for reports made within 60 days of receiving the bank statement. After the 60-day mark, consumers risk losing all the money involved in the fraudulent transfer.
All in all, EFT transactions are far safer than writing paper checks. When you pay by check, you make it possible for anyone who happens to see your check to obtain your bank account and routing numbers. Often, paper checks pass through many hands on their way to the bank. Anyone who lays eyes on your check has the opportunity to steal your information and use it to obtain money from your account. EFT transactions are encrypted for transmission, decreasing the risk of unlawful interception.