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#2246534 - 12/15/20 03:05 PM ACH Stop Payment Form
Irishguy Offline
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Irishguy
Joined: Aug 2008
Posts: 569
Kentucky
Our current form does not inform the accountholder that a single entry stop payment is only effective for 6 months. Other than UDAAP concerns, is there a requirement to notify or disclose to the accountholder that a single entry stop payment is only effective for 6 months? Your help is greatly appreciated.

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Audit
#2246574 - 12/15/20 11:48 PM Re: ACH Stop Payment Form Irishguy
happyauditor Offline
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happyauditor
Joined: Nov 2004
Posts: 808
NY
Assuming you are speaking of ACH stop payments for consumers...

It was my understanding that oral stop payment orders are in effect for only 14 days unless received in writing (if the bank requires it in writing), it is indefinite until satisfied or revoked by the consumer. Not sure where 6 months comes into play.

Reg E section 1005.10 (c)
(c) Consumer's right to stop payment.

(1) Notice. A consumer may stop payment of a preauthorized electronic fund transfer from the consumer's account by notifying the financial institution orally or in writing at least three business days before the scheduled date of the transfer.

(2) Written confirmation. The financial institution may require the consumer to give written confirmation of a stop-payment order within 14 days of an oral notification. An institution that requires written confirmation shall inform the consumer of the requirement and provide the address where confirmation must be sent when the consumer gives the oral notification. An oral stop-payment order ceases to be binding after 14 days if the consumer fails to provide the required written confirmation.

OFFICIAL STAFF INTERPRETATION
10(c) Consumer's Right to Stop Payment

1. Stop-payment order. The financial institution must honor an oral stop-payment order made at least three business days before a scheduled debit. If the debit item is resubmitted, the institution must continue to honor the stop-payment order (for example, by suspending all subsequent payments to the payee-originator until the consumer notifies the institution that payments should resume).

2. Revocation of authorization. Once a financial institution has been notified that the consumer's authorization is no longer valid, it must block all future payments for the particular debit transmitted by the designated payee-originator. But see comment 10(c)-3. The institution may not wait for the payee-originator to terminate the automatic debits. The institution may confirm that the consumer has informed the payee-originator of the revocation (for example, by requiring a copy of the consumer's revocation as written confirmation to be provided within 14 days of an oral notification). If the institution does not receive the required written confirmation within the 14-day period, it may honor subsequent debits to the account.

3. Alternative procedure for processing a stop-payment request. If an institution does not have the capability to block a preauthorized debit from being posted to the consumer's account—as in the case of a preauthorized debit made through a debit card network or other system, for example—the institution may instead comply with the stop-payment requirements by using a third party to block the transfer(s), as long as the consumer's account is not debited for the payment.
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#2246624 - 12/16/20 06:22 PM Re: ACH Stop Payment Form Irishguy
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,336
Cape Cod
And if you get past the 14-day mark, there is no expiration provision in Reg E or in Nacha rules. IN fact, Nacha, in subsection 3.7.1.4 of its Operating Rules, says that a stop payment order [on a consumer account] will remain in effect until the earlier of the withdrawal of the stop payment order by the Receiver, or the return of the debit entry (or all the entries if the order covered more than one debit entry relating to a specific authorization involving a specific Originator).

For non-consumer accounts, Nacha adds a six-month duration for a stop order.
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#2246629 - 12/16/20 07:19 PM Re: ACH Stop Payment Form Irishguy
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,336
Cape Cod
And a reminder, here, since definitions are ALWAYS important, that the 14-day rule only applies to ORAL stop orders. That means they were delivered by SPEAKING, so the orders would only come in by phone or, perhaps, thru a drive-up. Some bankers have been trying to apply it to online-received stop orders, and the law and regulations don't apply the 14-day rule to them.
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