What are other FIs doing regarding the new ACH WSUD? The issue I have is permanently blocking future payments when the customer advises you that they have revoked their authorization with an Originator. You cannot return an entry “R07-Authorization Revoked” without a WSUD, which under the new rules cannot be completed until after a transaction posts. This change seems contrary to the Reg E Official Staff Interpretation, Section 205.10(c)2:

“Once a financial institution has been notified that the consumer’s authorization is no longer valid, it must block all future payments for the particular debit transmitted by the designated payee-originator...The institution may not wait for the payee-originator to terminate the automatic debits.”

Under the old rules, there was no timeframe for completing a WSUPP, so we revised the wording to cover future transactions. That's no longer possible.

I went to a seminar by our regional ACH payment association on the new changes, and they suggested educating the consumer on their responsibility to contact the Originator to revoke their authorization, and the Originator will stop the entries according to NACHA rules. (That might work in a perfect ACH world, but experience tells me otherwise.) The second option they suggested is obtaining a stop payment, but returning an entry "R08" does not convey the Receiver's intent to permanently revoke it, so Originators can keep on originating entries...

Some of the other FIs in attendance said they were going to have their customers pre-sign an undated WSUD. That just doesn't sit well with me...

There is nothing preventing you from accepting a blanket stop order on all future entries from that Originator, and send the items back as stopped. That does not require a WSUD.

In that same regard, are we OK to require the customer to identify the amount of the particiular debit we are stopping all future payments of? For example, can we say we are only going to stop all future payments of $100.00 originated by ABC Company? Would we still be in compliance of Reg E if we did this?

I agree with John’s statement about the blanket stop but unfortunately, "R08- Stop Payment" allows the Originator to re-originate entries and doesn’t convey that future transactions are unauthorized. I would rather originate one return for "Authorization Revoked" than repeatedly return entries as stop payments.

We experienced this in the past and it is primary reason we amended the WSUPP to cover future transactions. Whether it's the Receiver not properly revoking their authorization or the Company not honoring the revocation, the RDFI sometimes gets stuck in the middle.

Returning items as R08 should be effective if Originators follow the Rules and obtain new authorization from the customer before re-originating a returned R08 item.

We have typically encouraged customers to watch their accounts and if the item they were concerned about came in, we would return it authorization revoked with no charge. If they wanted to make sure it never posted, we would place a stop payment on the system and charge them for it. My concern with the new rules is that you will have stop payments remain on your system forever. Is this a concern for other bankers as well? How are other banks going to handle the stop payments.

As I understand the NACHA rules, because the return code R08- Stop Payment is intended for a specific entry or series of entries, the Originator does not need to obtain a new authorization on recurring entries if one is returned. The ACH Rules book even states that R08 should not be used if the Receiver intends to revoke their authorization. (See page OG 101) However, one would assume that if the Originator received a stopped entry, they would contact the Receiver to see what the heck is going on, but that's not always the case.

As to permanent Stop Payments, it was suggested to us in the ACH seminar that there’s nothing to prevent the FI from continuing to charge a fee for the service until the customer releases the stop. Something to look into.

Does anyone know a good website or resource for me to find out more about these changes? I have only one read notification which was vague, and am not even familiar with the new WSUD referred to earlier. Any guidance would be much appreciated! Thanks.

There have been a couple of BankersThreads on the topic. this one listed some resources: http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1336900#Post1336900

There is a seminar listed on the NACHA website under education:
https://www.nacha.org/member-apps/index.cfm?action=events.events You might also check with your regional payment association.

Thanks. I will check those out. I checked with our regional payment association, and they are covering this subject in a broader rules update seminar. Unfortunately it is not in our budget for me to register.