Customer liability on ACH and Reg E transactions
by John Burnett, BOL Guru BIO AND CONTACT INFO
Question: I need clarification on error resolution and customer liability as it relates to ACH and Reg E transactions. For what/when does a consumer become liable and for how much when there is an ACH error, and what is the timing for reporting it? I have read that NACHA will reimburse up to 60 days from date of transaction, which is different from Reg E, which is 60 days from first statement.
Answer: It's true that there is a "dead spot" between the NACHA rules and those in Regulation E. That's because NACHA needs a rule based on something under its control (the settlement date) and Reg. E's rule starts a clock ticking when the customer might have the knowledge something is amiss (statement).
Under NACHA rules, the RDFI (receiving bank) cannot use the ACH unauthorized transaction rules if the transaction in question is more than 60 days old. Under Reg. E, the consumer is not liable for an unauthorized non-access-device EFT (ACH debits generally qualify here) unless it occurs more than 60 days after the date a statement is made available showing the first such bogus EFT.
NACHA rules do not prohibit the RDFI from attempting to collect directly from the originator or from getting an OK from the ODFI (the originating bank) to submit a late claim. Either of those approaches would be OK under the rules. But if those approaches fail, the RDFI can be left "holding the bag" for about a month's unauthorized EFTs.
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