What exactly happens to business customers that claim a Reg. E dispute when Reg. E only applies to consumers. Does the bank still have to investigate but just not provide provisional credit nor follow the investigation time limits?



Bank has a corporate customer that is claiming a Reg. E dispute with an ACH entry. The bank is past the 60 days from the date of settlement so they can’t send it back through the ACH process. However, the customer did notify them within 60 days of the date of the statement that contained the error. So if this were a consumer; the bank would re-credit the consumer and seek reimbursement directly with the ODFI. But how does this change since it is not a consumer?

Explain to the customer that Reg E does not apply to his situation as a commercial customer. You may be able to get the ODFI to agree to take back the item (and I would try), but if not, it is between the customer and the originator. Commercial customers have a 24-hour window for returns. They may want to implement a daily account review process to identify unauthorized items.

Your commercial customers have a window of time in which to verify the items paid against their accounts. It is unreasonable, in my opinion, to hold a business customer to a next-day standard of notification unless your deposit contract specifically says so and the customer has access to online banking that permits such a daily review.

It is critical that bankers understand that their ability to return an item via the ACH has no legal bearing on the contract between the bank and its deposit account customer. It's really not any different from the idea that a bank has a midnight deadline to return an unauthorized (signature forged) check, although its customer has from 14 to 30 days (or longer) after the statement reflecting the payment of the check is delivered to claim that the check was wrongfully paid.

We will usually complete an investigation even on Corporate ACH entries. Under the NACHA Rules, there are warranties in place that are not impacted by the 24 hour return window, such as ensuring that all entries are properly authorized.

We will pay/deny the claim based on the investigation, which may include a request to the ODFI/Originator for a copy of the authorization. Once I have proof, I've had good success in asking for a "Permissable Return" on fraudulent Corporate ACH entries that are outside of the 24 hour time frame.