An announcement by Rohit Chopra, the director of CFPB came up with a big relief to crypto users, mainly in terms of hacks, unauthorized transfers, and errors. The booming craze for cryptocurrency and technological advancement made it effortless for hackers to attempt illegal actions to make unauthorized transfers. To mitigate all these challenges, the US financial consumer watchdog came up with a new plan to apply EFTA.
All About Electronic Fund Transfer Act (EFTA)
On October 6, an announcement was made by the director of CFPB to protect consumers from fraudulent crypto transfers. The leading US agency for consumer financial protection is about to apply EFTA to safeguard consumers from illegal action including hacking, unethical transfers, and other related actions. The announcement was made by Rohit Chopra, the director of CFPB, and is expected to apply effectively on the private digital dollars and other virtual assets.
But, what does the EFTA actually mean? Basically, EFTA is a federal law introduced in 1978 to protect consumers while making funds transfers over online platforms including debit cards, bank accounts, or ATMs. With the purpose of limiting consumer losses, the law holds strong roots in the financial sector and is all set to strengthen the consumers’ assets from frauds and hacks.
Federal law simply helps financial institutions to inform the users of when they are accountable for unauthorized transfers and is communicated prior to the first electronic transfer happening on any user’s account. Activities of fraudulent accessing and use of consumer funds by Bankman-Fried boomed the need for laws such as EFTA in the marketplace. In addition to this, FTX also suffered a $400 Million hack after bankruptcy.
Consideration of EFTA by CFPB
Year-by-year increase in crypto platform hacks and criminal trials attempted by co-founder of FTX, Sam Bankman-Fried enhanced the concerns of Rohit Chopra for consumer protection. Keeping the current situation of the Crypto market in mind, CFPB decided to involve EFTA to protect individuals from fraud transfers.
In addition to this, the agency is also going to issue orders to particular large technology companies to collect information on business activities that require personal data and issuing private currency. For proper application of the federal law, the agency is also planning to investigate the non-banks offering payment platforms. Apart from this, the director also suggested the Treasury’s Financial Stability Oversight Council classify the crypto activities as payment clearing and settlement activity to make the currency transfer more easy and transparent.
EFTA only aims to safeguard the consumers from any kind of fraudulent activities while fund transferring along with sustaining the interest of individuals in the financial system.
Conclusion
Rohit Chopra, the director of CFPB made an important announcement associated with the fraudulent activities taking place mainly in the crypto marketplace. The agency is to include EFTA federal law to protect consumers from hacks, errors, and unauthorized transfers. Upsurge in a number of cyber crimes and Sam Bankman-Fried’s fraud case enhanced the concerns of CFPB
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/10/15/consumer-financial-protection-bureau-cfpb-vision-to-enact-efta/