How secure is the electronic transfer?

How secure is the electronic transfer? Posted On
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Electronic Funds Transfer (EFT) is a fast and convenient way to send and receive money. Usually, it’s widely used without problems, but like anything involving money, it can be a target for cybercriminals. The question is, is electronic transfer safe? After all, there have been reports of people losing thousands of dollars to electronic money transfer scams.

In this article, we’ll explore how electronic money transfers work, how to protect bank accounts from identity theft, how banks can investigate fraudulent transactions, and how to ensure secure electronic transactions.

Electronic Transfer Definition

Under the US Electronic Funds Transfer Act of 1978, an electronic transfer is defined as:

” A transfer of funds initiated by an electronic terminal, telephone, computer (including online banking) or tape for ordering, instructing or authorizing a financial institution to debit or credit a consumer’s account “.

Electronic funds transfer (sometimes simply referred to as “electronic transfer”) is known by different names around the world. Eg:

  • In the US, they can be called “e-checks”.
  • In the UK, use “Bank Transfer” or “Bank Payment”.
  • In many European countries, “remittance transfer” is widely used.

How does EFT work?

Online transfers are the modern equivalent of wire transfers. You can send money to someone instantly, transferring money (or data representing the money) from you to another person.

A typical transaction essentially involves contact information (such as a mobile number or email address) of the sender and recipient, tied to a bank account. Often, online transfers can be made through secure, web-based services for a small fee.

The process is simple and usually goes something like this:

  • The sender opens an online banking session and specifies the recipient, the amount to send, and security questions and answers. Funds are debited immediately, usually with a small fee.
  • The sender sends the answer to the security question separately to the recipient, usually via another medium for security reasons.
  • An email or text message is then sent to the recipient with instructions on how to withdraw money and answer questions.
  • The recipient must answer the security question correctly. Funds can be returned to the sender if the recipient fails to answer the question correctly within the specified number of times.
  • If the electronic transfer is not accepted after a certain period, the transfer will not be executed. Transfer times depend on the bank and/or individual settings.

In some cases, you can send money online or even receive online transfers without a bank account. A credit card or cash can be used instead, but higher fees may apply.

Common reasons for using electronic transfers include:

  • Mailed checks can take several days to arrive and can be lost or stolen in the mail.
  • In the case of international remittances, there is a currency exchange fee, which is usually more expensive than the remittance fee.
  • Transfer money online almost instantly to anywhere in the world without physical hassle.

Are electronic transfers safe?

Electronic transfer fraud occurs when a third party intercepts a transfer by hacking into someone’s email account and guessing correctly or finding the answer to a security question. They then deposit the money to themselves, and the money never reaches the intended recipient.

Electronic transfer scams are usually when someone asks you for money (for themselves or to buy a product for you) or asks you to donate to a cause. Coronavirus scams are an example of this: Many people are asking people to electronically transfer money to buy vaccines, personal protective equipment, and test kits, but these products are never delivered (to name just a few examples of scams).

While no payment or collection system is 100% secure, extensive security measures are in place to ensure electronic transfers are protected, including:

  • Multiple layers of data encryption: This means that the data is encoded multiple times so that even if the data is stolen or hacked on its way to the recipient, it cannot be read by others.
  • Fraud prevention: A reputable electronic money transfer company will ask you to answer security questions or verify your identity to ensure the security of the transfer. Transferring money to a suspicious recipient or logging in with a new device can trigger a fraudulent event.
  • Authentication: If a provider requires a secure password or automatically logs you out after a certain amount of time, it’s a good sign that they take precautions to ensure your funds are safe throughout the process.
  • Automated Clearing House (ACH): In the United States, all online banking transactions, including online money transfer services, are processed by the Automated Clearing House (ACH), an independent institution that provides secure financial data transfers.

Various services offer varying degrees of protection, such as confirmation calls to both parties (private information must be verified), confirmation emails, and even insurance policies to guarantee that your money will be sent and that your bank account will not be compromised. Give way. Some providers place limits on how much money can be sent and how much can be transferred over some time.

The industry is regulated by several agencies that provide licenses to companies that specialize in money transfers. It is important to use a reliable, reputable, licensed money transfer company.

When sending an electronic transfer, the sender has some major responsibilities:

  • Provide the exact email address of the recipient.
  • Include valid security questions and answers that are not easily guessed and known only to the sender and recipient.
  • The password is not included in the message accompanying the transfer.
  • Make sure that the password is only known to the recipient. This means that easily obtainable or guessable information such as name, date of birth, place of employment, etc. should be avoided.

Identity Theft and Electronic Transfers

If criminals gain access to your debit or credit card, or personal financial information such as account numbers, passwords, or Social Security numbers, they can steal funds from your bank account or charge your credit card.

They can also take out loans and apply for credit cards in your name, committing a crime called identity theft. Identity theft can seriously damage your credit and financial standing, and it can take years to restore your good credit and reputation. According to the Federal Trade Commission (FTC), identity thieves use a variety of methods to steal your personal information, including:


Hunting Criminals look for bills or other documents with your personal information in the trash you throw out. Identity thieves can get hold of details such as bank account numbers, health insurance, or credit cards by stealing emails. If they get key information like your Social Security number, they may create a new identity.


Criminals posing as financial institutions or companies send you spam or pop-up messages to trick you into revealing personal information.


Criminals use different techniques to install malware on other people’s devices. Malware types include viruses, spyware, Trojans, and keyloggers, all of which allow criminals to gain access to your device and the information stored on it.

Transfer Your Mail

Criminals fill out a change of address form to transfer your bill to another mail location under their control.


Criminals use a special storage device called a skimming device to steal your credit or debit card numbers while processing your credit card. Skimmers can be installed on petrol pumps or ATMs to collect card data. Some machines behave like point-of-sale technology.


Criminals steal wallets, mail, bank or credit card statements, pre-approved credit offers, and more to gain access to your personal information.

Note: If a fraudulent transaction has occurred on your account, it does not mean that your identity has been stolen. This could be an isolated theft that can be resolved quickly. In any case, if you think you are a victim of theft, contact your bank immediately.

How do banks investigate unauthorized transactions?

Online banking theft is serious, but unauthorized transactions must be identified before banks can investigate them. Often, fraudsters start with small transactions—one that is likely to go unnoticed. Sometimes, fraudsters may use a card number for years to buy small recurring subscriptions or gift cards that can be resold. If these transactions go undetected (because consumers don’t regularly check their card bills), then fraudsters are more emboldened.

This highlights the importance of regularly checking bank and card statements. You should notify your bank as soon as you notice a problem. Banks may investigate upon notification.

Once banks become aware of disputed or unauthorized transactions, they can investigate. You will be asked to provide details of unauthorized charges and any supporting evidence of fraudulent charges.

Rules for how banks handle unauthorized transfers vary by jurisdiction and country, so it’s important to familiarize yourself with your rights as a consumer in your country.

In the United States, the Electronic Funds Transfer Act of 1978 limits liability to $50 if fraud is reported within two days of the statement being issued. If reported after two days but within sixty days, the limit of liability is $500. However, if reported after 60 days, the consumer is responsible for all fraudulent activity – illustrating the importance of regularly checking activity.

Once the bank becomes aware of the fraudulent charge and receives the relevant documentation from you, they should respond to the dispute within 30 days. In most cases, the bank will have up to 90 days to investigate and resolve the error.

Typically, incidents will be handled by credit fraud investigators within the bank, who will be trained on how to determine if there is fraud and how it is committed. Depending on the nature and extent of the fraud, the bank may decide to involve law enforcement.

Often, banks will also advise consumers to contact the major credit reporting agencies (in the US, these are Equifax, Experian, and TransUnion ) and request that a fraud alert be placed on file.

This ensures that attempts to open a new credit account will be rejected unless the creditor speaks directly to the consumer and takes other steps to verify their identity.

How to Prevent Electronic Transfer Theft

You should always exercise caution when it comes to sending or receiving money. To avoid electronic transfer theft, follow these tips:

  1. Only send money to people you know and trust, just like paying cash. Never send money to someone you don’t know.
  2. Call the recipient to verify their identity. Make sure to transfer money to the correct email account/person.
  3. Choose a security question whose answer is not easy to guess. This means avoiding names, birthdays, hometowns, etc. Don’t use anything that can be guessed by looking at your social media profiles.
  4. Do not include answers to security questions in e-transfer postscripts.
  5. Always use strong passwords that are not easy to guess or discover —and be sure to share passwords through secure channels. Create unique strong passwords to protect your accounts, including email and social media accounts. Do not save any details on public computers.
  6. Be wary of suspicious emails. If you don’t know if they are legal, make sure not to provide personal information. Never automatically click on links in unknown emails or texts.
  7. Likewise, don’t call phone numbers listed in unsolicited messages. If you’re not sure whether a piece of information is true, research the organization’s phone number or website individually and find out for yourself.
  8. Keep your email safe too —don’t stay logged in when you’re away from your computer. Please log out and make sure your device is safe and don’t leave it alone in public places.
  9. Avoid using electronic transfers to pay for products and services. Electronic transfers are like cash transactions—hard to dispute or refund. If you buy something online, pay with a credit or debit card for extra protection.
  10. Remember, people are not always what they say they are. Always exercise caution and always follow up and investigate further before making any kind of payment.
  11. Be suspicious of any advance payment request. Be especially vigilant when someone or a “company” is selling you something you didn’t ask for, register, or expect. Always question unsolicited inquiries for information – they may be scams. Instead, contact the company directly using a trusted email or phone number to check that the request is genuine.
  12. You will never be contacted by a bank or trusted organization (such as the police) to ask for your PIN or full password, or to transfer money to another account. Be wary of any caller or message asking for your PIN or personal information via phone or email.
  13. Sign up for fraud alerts with your financial institution to detect suspicious activity on your account.
  14. Check the URL or email address. Check the website address or the sender’s full email address to check if it’s legitimate. Seek to use HTTPS, don’t trust websites that are still using HTTP.
  15. Watch out for poor spelling or grammar. Legitimate banks and retailers proofread their emails and want them to look as professional as possible. Spelling, grammar, or punctuation errors can be signs of scams.
  16. Be careful if someone tries to rush you. For example, if you are told that you need to act “quickly” before an offer or product expires, or if your funds are “not safe” and need to be “transferred to another account”. When it comes to finances, only criminals will try to panic you — not official channels. So don’t be deceived and don’t act impulsively. Please stay calm, calm down, and make sure to investigate additionally what the other party is claiming.

What to do if you are a victim of EFT theft or fraud

The first thing to do is to contact the bank or financial institution immediately. Alert them to the situation and find out if they can get their money back after being scammed online. Make sure to cancel any recurring payments and consider freezing any accounts that have been tampered with.

It’s also a good idea to change passwords across the board, including on social media. If you think your identity has also been stolen, please contact the police. You can also report scams to the relevant authorities in your country. E.g:

In the U.S

It is possible to contact one of the three major credit bureaus and discuss whether a fraud alert needs to be placed on your file. This will help prevent identity thieves from opening new accounts in your name. The three credit bureaus are Equifax, Experian, and TransUnion.

You can report all suspicious contacts to the Federal Trade Commission. Their website,, can provide you with a personalized recovery plan, guidance, progress tracking, and pre-filled forms and letters.

in England

If you do not hear back from your bank within 8 weeks, you can fill out a form on the Financial Ombudsman Service website. This can help faster if your bank sends you a refusal letter advising you to use the Ombudsman. Citizens Advice Scams Action and Action Fraud are also useful resources focused on the UK.

In Australia

IDCARE is a free service that will work with you to develop a plan to limit the dangers of identity theft. The Australian Competition and Consumer Commission’s Scamwatch collects data on scams within Australia. Your report helps Scamwatch create scam alerts to alert the community.

in Canada

You can report identity theft to the Canadian Fraud Centre, which provides support and assistance to victims.

Finally, one of the easiest ways to protect yourself is to install a strong cybersecurity solution on all of your devices. We recommend Kaspersky Internet Security, which protects you from malware infections, spyware, and data theft, and secures your online payments with bank-grade encryption.

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