Timeframe for ACH Transaction Dispute
by John Burnett, BOL Guru Guru Bio
Question: Is there a time frame in which a business customer must file their dispute for an ACH transaction? If yes, what is the time frame and what is the governing regulation or rule?
Answer: Assuming that the dispute is over whether such a transaction was authorized, the business depositor is given a contractual period for statement review and notification of any unauthorized transactions. That time period should be specified in the bank's business deposit contract. It's appropriate to point out here that if a transaction is unauthorized and the customer notifies the bank within the contractual period for doing so, the bank should reimburse the customer for the erroneously-paid transaction, regardless of whether the bank has missed any deadline for returning the item under ACH rules.
There is, of course, a time frame within which the bank must return an unauthorized ACH item (or enter a warranty claim against it). For most commercial account ACH debits, there is a two-day deadline for getting the item back to the ODFI (the ACH equivalent of the UCC's "midnight deadline" rule) if the bank wants to use the ACH system for the return. Some checks on business accounts are eligible for check conversion to ARC, BOC and POP ACH entries. An ARC, BOC or POP unauthorized transfer claim can be handled in the same timeframes for a business account as for a consumer account. That is, if the depositor completes a WSUPP within 15 days of the statement reflecting the entry, the Receiving Depositary Financial Institution (RDFI) has to file an adjusting entry return in time to get it to the ODFI by the banking day following the 60th calendar day after the Settlement Date of the original entry. The RDFI can also attempt to collect against the Originator's and ODFI's warranties of authorization outside the ACH system (such as in a court suit).
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