Unlimited liability for an unauthorized EFT may apply if the consumer notifies their financial institution:

Unlimited liability for unauthorized electronic funds transfers (EFTs) is a critical aspect of the regulation that governs consumer liability. According to the Electronic Fund Transfer Act (EFTA) and the corresponding regulations, if a consumer fails to report an unauthorized transaction within a specific timeframe, they may face unlimited liability for those transactions.

In the context of the choices presented, the correct answer is that unlimited liability applies if the consumer notifies their financial institution 2 days after noticing the unauthorized EFTs. This is because the EFTA stipulates that consumers are liable for unauthorized transactions made within a time frame of 60 days after the financial institution sends the statement that includes the unauthorized transaction. However, to avoid unlimited liability, they must report the unauthorized EFTs promptly, ideally within 2 business days.

Therefore, notifying the bank within 2 days allows the consumer to limit their liability. If they wait longer—such as 31 or 61 days—they could be held fully responsible for the unauthorized transactions, thus incurring unlimited liability, leading to financial loss. This framework is intended to encourage consumers to regularly monitor their transactions and report discrepancies quickly.