Hello, I work for a non-bank finance company. I was trying to find the NACHA rule for the time window for an individual or company to find and submit an unauthorized ACH (WEB) payment. My ACH portal vendor is telling me it's 2 years. I thought it was 120 days. It's a little bit crazy and puts a lot of heat on a company that accepts ACH payments,if it's really 2 years. This is an auto loan, and to suddenly get all your payments reversed after 2 years....well we'll never find the debtor or the car now, and the criminal debtor has been getting a free ride for two years while our vehicle has devalued. I feel like we are harmed somehow by the checking account holder's lack of diligence. Thanks for any help!

60 days from settlement date of the entry is your window. The rest is yours.

The window for using the ACH network to reverse WEB payments from a CONSUMER account is covered by NACHA rules §8.6.1 and §8.7.1. The adjusting entry (effectively, the return) must be available to the ODFI by the start of business on the first business day following the 60th calendar day after the Settlement date.

WEB entries should not be used for non-consumer transactions. CCD or CTX entries may be used, instead.

For CCD or CTX entries to a non-consumer account, the window is very short -- the return entry must be available to the ODFI at the start of business on the second business day after the Settlement Date.

But those windows only address when the transaction can be sent back using the ACH system. Each and every ACH transaction you put into the system is accompanied by your ODFI's warranty that it was authorized (your contract with the ODFI binds you to the ODFI if the warranty is breached). Quoting from the 2010 NACHA Operating Guidelines, page OG 44, "ODFIs must understand that the warranty language within the Rules is broad and does not limit itself to the period of time in which an RDFI can recover funds through the return of entries through the ACH Network. In other words, the ODFI's potential liability under the NACHA Operating Rules for a breach of warranty is not limited to the return time frames, but is, instead, limited only by the statute of limitations for breach of contract claims under the applicable state law. The ODFI's liability for breach of warranty may exist for up to seven years in some states."

Well, some new facts have come to light. Let's try this scenario: Due to a technical error, a web payment was presented by us as PPD payment rather than a WEB payment. This is even though the debtor went to our website, put in his password to get in, and put in all the checking account information himself. So....our vendor is saying that's why we're stuck with this chargeback after nearly two years, because that's how long we're supposed to retain proof of authorization. Since we won't have proper authorization for a PPD payment, we need to pay the money back. Does that make any sense?

Yes, it makes sense, if the breach of warranty claim is being made directly against the ODFI as I described above. The entry should not have been sent back as an adjustment through the ACH, because the deadline for doing that has long since passed.

You or your vendor is responsible for making sure you have the proper authorization for the entry you submit to the ACH.