In follow-up to the NEW NACHA Rule for Unauthorized Return rate Reprting effective 3/15/13, does the following verbiage summary this new NACHA Amendment? If not, what is incorrect?
ODFI RETURN RATE REPORTING:
Earlier this year, NACHA made a modification to the Rules for Financial Institution (ODFI) Return Rate Reporting which shortens the reporting period from 60 days to 30 days during which the ODFI has to reduce Originator return rates for unauthorized ACH debits below the threshold before the initiation of a rules enforcement proceeding.
IMPACT TO ORIGINATORS AND THIRD PARTY SENDERS:
Originators and Third-Party senders with excessive return rates will be required by their Financial Institution to take action more quickly to lower their unauthorized return rates below 1 percent.
UNAUTHORIZED RETURN RATE REPORTING & FINES:
The NEW rule requires Originators of ACH Debit entries to keep their return rate for unauthorized entries below 1percent during any 30-day period. The rule further indicates that any continuation to originate debit entries that result in high unauthorized return rates of 1 percent or above can result into Fines assessed and their Financial Institution being required to terminate the Originator/Third-Party Sender relationship.
The rule further states that should an Originators rate of unauthorized debit returns equal or exceed 1 percent during any 30-day period; the Company will have a 30-day grace period to reduce the excessive rate of unauthorized returns. During this time period, it will submit its plan (i.e., through improved communication with customers, enhanced authorization processes, and/or other industry tools) and timelines for reducing the rate of unauthorized returns to the Financial Institution. The submission of this Plan of Action will be taken into account during any NACHA System of Fines process.
If it takes the originator longer than 30 days to bring its return rate down below 1 percent, any fines assessed to Financial Institution by NACHA can be assessed directly to the Company if outlined in the ACH Agreement.
If the Comapny/Originator is unable to bring its Return Rate below the 1 percent threshold, but instead continues to process transactions resulting in high return rates during that 30-day period the Financial Institution may terminate the Originator/Third-Party Sender relationship.
TYPES OF UNAUTHORIZED RETURNS:
R05 – Unauthorized debit to consumer account using corporate SEC code.
R07 – Authorization revoked by customer
R10 - Consumer advises not authorized, notice not provided, improper source document, or amount of entry not accurately obtained from source document.
R29 - Corporate customer advises not authorized
R51 – Item is ineligible, notice not provided, signature not genuine, item altered, or amount of entry not accurately obtained from item.