Expedited Funds Availability Act (EFAA) USA

The Expedited Funds Availability Act (EFAA) is a federal law in the United States that regulates the availability of funds deposited in checking and savings accounts. The law was enacted in 1987 as an amendment to the Federal Reserve Board’s Regulation CC. The main purpose of EFAA is to ensure that funds deposited into checking and savings accounts are made available to customers in a timely and fair manner.

The law establishes rules for the availability of deposited funds, which are the funds that a bank is legally required to make available to customers for withdrawal or use. The EFAA requires banks to make certain types of deposits available for withdrawal within a specific time frame, known as the “funds availability schedule.” The schedule varies depending on the type of deposit, such as cash, electronic funds transfer, and check deposits.

For example, cash deposits must be made available for withdrawal immediately, while check deposits are subject to a hold period, which ranges from one to two days for local checks and up to nine days for non-local checks. Banks are also required to disclose their funds availability schedule to customers and to provide notice when a deposit is subject to a hold.

In addition to funds availability schedule, EFAA also regulates the fee that banks can charge for check deposits, limits the amount of the check that can be held and the amount of fee that can be charged.

Overall the EFAA is designed to provide a balance between the needs of depositors and the operational needs of banks, by providing a clear and consistent framework for the availability of deposited funds.

The Expedited Funds Availability Act (EFAA) applies to all depository institutions in the United States, including banks, savings and loan associations, and credit unions. It applies to all types of checking and savings accounts, including personal accounts, business accounts, and government accounts. It also applies to all types of deposits, including cash, electronic funds transfers, and check deposits.

The law establishes a schedule for the availability of deposited funds, which varies depending on the type of deposit, such as cash, electronic funds transfer, and check deposits. Banks are required to disclose their funds availability schedule to customers and to provide notice when a deposit is subject to a hold.

EFAA applies to all transactions, regardless of the amount of the deposit or the account balance of the depositor. The law applies to all types of checks, including personal checks, business checks, and government checks.

Some key provisions of EFAA include:

1. Funds availability schedule: The law establishes a schedule for the availability of deposited funds, which varies depending on the type of deposit, such as cash, electronic funds transfer, and check deposits. For example, cash deposits must be made available for withdrawal immediately, while check deposits are subject to a hold period, which ranges from one to two days for local checks and up to nine days for non-local checks.
2. Disclosure of funds availability schedule: Banks are required to disclose their funds availability schedule to customers and to provide notice when a deposit is subject to a hold. This helps customers to understand when they will have access to their deposited funds and to plan accordingly.
3. Limitation on check holds: EFAA limits the amount of the check that can be held and the amount of fee that can be charged. Banks are not allowed to hold more than a certain amount of funds or charge more than a certain amount of fee for check deposits, regardless of the type of check or the account balance of the depositor.
4. Right to next day availability: Certain types of deposits, such as government checks, cashier’s checks, and direct deposit are required to be made available the next business day.
5. Special rules for new accounts: Banks are required to provide special notice to customers who open new accounts, explaining the funds availability schedule and the terms under which funds will be made available for withdrawal.
6. Right to receive notice of extended holds: If a bank places a hold on a deposit for a longer period than what is stated in the funds availability schedule, the bank must provide written notice to the depositor explaining the reason for the extended hold and the date when the funds will be available.

Expedited Funds Availability Act (EFAA) Responsibilities and Accountabilities

The law gives consumers the right to access to their deposited funds in a timely manner and reduces the “float” time for banks to make funds available.

The law established the following responsibilities and accountabilities:

• Banks must make deposited funds available to consumers within specific timeframes, depending on the type of deposit. For example, for checks, banks must make funds available within one or two business days.
• Banks must disclose their funds availability schedules to consumers, including the timeframes for making funds available and any restrictions or exceptions that apply.
• Banks must provide notice to consumers if there will be a delay in making deposited funds available, and must provide an explanation of the reason for the delay.
• Banks are not liable for the availability of funds from an electronic funds transfer (EFT) until the funds are made available to the consumer, unless the delay was caused by an error on the bank’s part.
• Banks are held accountable for losses incurred by the consumer for dishonored checks that are made available for withdrawal before the bank has collected the funds from the other bank.
• Banks are held accountable for making funds available on time to the consumer, if not, they are subject to civil penalties of up to $100,000 per day.

Expedited Funds Availability Act (EFAA) Sanctions and Remedies

The Expedited Funds Availability Act (EFAA) provides for several sanctions and remedies for banks that violate the law. Some of the key provisions include:

• Civil penalties: Banks can be subject to civil penalties for violating the law or regulations, including failure to make funds available within the required timeframes, failure to disclose funds availability schedules, and failure to provide notice of delays. The penalties can range up to $100,000 per day.
• Enforcement actions: The Office of the Comptroller of the Currency (OCC), the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Consumer Financial Protection Bureau (CFPB) have the authority to take enforcement actions against banks for violations of the EFAA. This can include requiring restitution for harmed consumers, ordering changes to business practices, and imposing fines and penalties.
• Cease and desist orders: The OCC, the Federal Reserve, the FDIC, and the CFPB have the authority to issue cease and desist orders to banks that are engaged in activities that violate the EFAA. This can include ordering the cessation of certain business practices and requiring changes to business practices.
• Prohibitions and bars: The OCC, the Federal Reserve, the FDIC, and the CFPB have the authority to prohibit individuals from participating in certain activities or from holding certain positions if they have been found to have violated the EFAA.
• Criminal penalties: Certain violations of the law and regulations may be subject to criminal penalties, including fines and imprisonment.

Overall, EFAA provides a clear framework for the availability of deposited funds and helps customers to understand when they will have access to their deposited funds and to plan accordingly.