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Limiting liability for certain CCD debits

by Mary Beth Guard and John Burnett, BOL Gurus

Question: What is a typical provision for a financial institution to make to limit its Regulation E liablility for consumers receiving Cash Concentration and Disbursement (CCD) debits to personal accounts? (CCD debits do not have extended return time frames if unauthorized or revoked.)

Answer: CCD entries should not be made to consumer accounts. If your ACH filter is capable of flagging such entries, you should contact your customer to determine why or how CCD entries are being initiated to his/her account, and then work with the customer to effect a change in how these payments are being made, if authorized by the consumer. I believe it would be appropriate to block CCD payments from consumer accounts after suitable efforts have been made to correct the erroneous use of this standard entry >
Note: Since this article was first published, NACHA has amended its rules. As of March 18, 2005, banks can use an R05 return code to return a CCD, CTX, or CBR entry to a consumer account if the consumer signs a Written Statement Under Penalties of Perjury to the effect that the transaction was unauthorized by the Receiver. For further information, refer to page OR 90 of the 2005 edition of NACHA's ACH Rules book.

The original version appeared in the September/October 2004 edition of the Oklahoma Bankers Association Compliance Informer.

First published on 04/11/05

First published on 04/11/2005

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