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NACHA Rule Change
March 2010: Consumer Debit Authorizations and Stop Payments
On Friday, March 19, 2010, two new ACH Rule amendments went into effect. The changes pertain to consumer accountholders who receive ACH debits. The Authorization and Returns change affects procedures for returning unauthorized debits and the Stop Payment change revises the requirements for placing stop payments on consumer accounts.
Authorizations and Returns The Authorization and Returns Rule changes are aimed at enhancing the quality of transactions in the ACH Network by more clearly defining an Originator's obligations for obtaining a consumer's authorization, and by improving processes related to the return of debits that Receivers claim are unauthorized. Highlights of the NACHA Rule changes include the following:
- Authorization Requirements - The authorization used by the Originator (the company sending an ACH debit) must be readily identifiable as an authorization and its terms must be "clear and readily understandable." Any purported authorization that is not clear nor readily understandable, is not a valid authorization and the transaction may be returned as unauthorized.
- Definition of an Unauthorized Entry - Part of the definition of an unauthorized entry has been changed from being a transaction that was initiated in an amount "greater than" the amount authorized by the Receiver (the accountholder receiving ACH debit entries) to being a transaction that was initiated in an amount "different than" the amount authorized by the Receiver.
- Modifications to the Written Statements - The document used by RDFIs (Receiving Depository Financial Institutions) to collect information regarding unauthorized consumer ACH debits is now entitled, "Written Statement of Unauthorized Debit" in lieu of the prior title, "Written Statement Under Penalty of Perjury" or "Affidavit" in order to avoid triggering any state notary requirements.
Stop Payments and Regulation E The ACH Rule change revises the requirements for the application of stop payment orders related to ACH entries destined to consumer accounts and realigns the NACHA Rules with the requirements of the Federal Reserve Board's Regulation E. Specifically, the Rule will:
- Eliminate the six-month time period after which a stop payment order placed by the consumer lapses.
- Provide that, where the stop payment order applies to more than one debit entry, the order remains in effect until all such entries have been stopped.
- Permit RDFIs to require, in cases where the Receiver desires to block all future payments related to a specific authorization/Originator, that the Receiver confirm in writing that the Receiver revoked authorization with the Originator.
ACH entries that are returned due to a stop payment order are returned by the RDFI with the return reason code R08 (Payment Stopped). Return reason codes and their definitions can be found in Appendix Five of the 2010 ACH Rules.
If you would like to receive a copy of the ACH Rules on CD ROM, contact your PNC account representative.
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