Originating Bank Returning/Reclaiming Funds
Answer by John Burnett, BOL Guru Guru Bios
Question: Is there any scenario in accordance with Regulation E when the originating bank has the ability to return/reclaim the funds for an ACH claimed as unauthorized by their account holder?
Answer: If an ODFI sends a credit entry to an RDFI and on the a Receiver, those funds are not subject to reclamation under Regulation E. If the ODFI's customer (who is debited for the funds) is a consumer and the consumer claims the transfer was not authorized, the claim is against the ODFI, which should not have initiated the transfer without the Originator's authorization, but the ODFI cannot recover the funds via the ACH. The ODFI is the liable party. Originators are able to REVERSE transactions sent in error (a duplicated batch, for example) within 5 days of the original Settlement Date, under NACHA rules, but this is not related to Regulation E.
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