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#248732 - 09/24/04 04:19 PM ACH Returns
Anonymous
Unregistered

On ACH returns, the regulation says all telephone and web transactions have to be returned as unauthorized. If a customer fills out the affidavit showing the reason for return as revoked authorization, can we get in trouble for returning the item as unauthorized? We cannot return the item as revoked authorization because it gets returned to us because that is not a valid reason.

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#248733 - 09/24/04 07:29 PM Re: ACH Returns
Paragon Offline
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On ACH returns, the regulation says all telephone and web transactions have to be returned as unauthorized. If a customer fills out the affidavit showing the reason for return as revoked authorization, can we get in trouble for returning the item as unauthorized? We cannot return the item as revoked authorization because it gets returned to us because that is not a valid reason.




I don't believe that the ACH regulations state that "all telephone and web transactions have to be returned as unauthorized." There are lots of available reasons to return an ACH item - secure a copy of a ACH Return Reasons Code Chart, for example "R07 Authorization Revoked by Customer" and "R10 Customer Advises Not Authorized" with R07 a good return reason in the case cited.

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#248734 - 09/24/04 09:14 PM Re: ACH Returns
HappyGilmore Offline
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Pulling people out of the ditc...
The NACHA rules do not allow you to use R07 - Authorization Revoked, for single entry WEB, TEL or POP entries. Page OR87, 2004 NACHA rules.
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#248735 - 09/27/04 01:50 PM Re: ACH Returns
Anonymous
Unregistered

So what does this mean? Can we get in trouble for returning the item as unauthorized, when in fact it is actually revoked?

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#248736 - 09/27/04 03:23 PM Re: ACH Returns
John Burnett Offline
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You're having a problem because you're barking up the wrong tree. If the customer did, in fact, issue an authorization, it cannot be revoked on a TEL, WEB, POP or ARC transaction. The customer may, however, issue a stop payment on any of the foregoing ACH items if the stop reaches the bank in time to prevent it from posting. Bounce the item with an R08 (payment stopped).

If the customer in such a case signs an affidavit that the transaction wasn't authorized, he or she is turning a case of buyer's remorse into a case of lying and potentially fraud. If the bank believes the customer actually authorized the transaction, it should not participate in the fraud.

On the other hand, of course, if the transaction actually was not authorized, the customer has every right to sign the affidavit and you ship the item back R10 (unauthorized).
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#248737 - 09/27/04 03:24 PM Re: ACH Returns
RandomName Offline
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Posts: 1,373
Austin, TX
Quote:

So what does this mean? Can we get in trouble for returning the item as unauthorized, when in fact it is actually revoked?




I think you have some leeway in deciding not to even return the items in such a case.

From the 2004 Operating Guidelines for NACHA, Section II, Subsection F, Part 3: Consumer Entries (page OG 57)--

"An unauthorized debit does not...apply to ACH transactions that were properly authorized but the goods or services were not satisfactory to the consumer."

And (from the same page)...

"An RDFI may refer to the specific designation of what constitutes an unauthorized entry in its evaluation of a consumer's claim that an entry was not authorized."

And later, in Section IV, Subsection F, Part 1: Return of TEL Entries--

"Because such transactions are one-time payments that are authorized at the time goods or services are purchased, the Receiver is precluded from revoking authorization for the transaction."

It sounds to me that if you are aware that customers are authorizing TELs and WEBs and then changing their minds and trying to file for R10s (Unauthorized) instead of the forbidden R07s (Revoked), you can decline to accept their claim, even with the WSUPP.

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#248738 - 09/29/04 04:53 PM Re: ACH Returns
NotALawyer Offline
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WEB entries can also be for recurring payments and could be subject to "authorization revoked".

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#248739 - 10/21/04 08:35 PM Re: ACH Returns
Chiquita Banana Offline
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I've been doing some research on this because of a customer of mine.
Now, I don't have the whole story yet since this just landed on my desk, however...
The WSUPP form states that he ordered an item from the company but changed his mind. He called the company to cancel the order but the company still debited the account.
My gut reaction is that I can not return this as R07. He did authorize the transaction at one point in time.
But I started doing my research so that I can have my ducks in a row when I talk to him next.
on www.nacha.org under the 'Rules' section there is an article discussing TEL entries and how many companies are using them fraudulently. It gave the parameters of when the TEL authorization is properly made. It has to be some type of ongoing relationship or the customer had to have contacted the company. It does address unscrupulous telemarketing firms that send out mail where the customer contacts the firm in order for the transaction to be run through.
If I believe that the company in this transaction did not follow proper protocol could I then return it as unauthorized R10? Or do I go to the ODFI and request the copies of authorization? (As the article hinted at?)

Thanks for reading. I can never say anything in 20 words or less!
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#248740 - 10/21/04 09:07 PM Re: ACH Returns
NotALawyer Offline
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Quote:

If I believe that the company in this transaction did not follow proper protocol could I then return it as unauthorized R10?




What is the basis for this “belief”? At this point you do not have enough information about the transaction at hand to make a justifiable return decision (based on the info in your post).

Quote:

Or do I go to the ODFI and request the copies of authorization? (As the article hinted at?)




You can request a copy of the authorization. However, if the authorization is valid, the item should not be returned.

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#248741 - 10/21/04 09:22 PM Re: ACH Returns
Chiquita Banana Offline
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The banana bin
Quote:

What is the basis for this “belief”?




Nothing yet, it's just hypothetical. Say the customer says that he has never worked with this company before and they contacted him. The company then did not follow proper protocol of a TEL origination. From what I read, the entry would then be unauthorized.
I'm just double checking to see how others have handled this.
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#248742 - 10/22/04 01:23 PM Re: ACH Returns
John Burnett Offline
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Then you have the customer complete the appropriate parts of the WSUPP and send the item back.
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#248743 - 10/26/04 03:24 PM Re: ACH Returns
SwankyFrank Offline
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This is not entirely true. At my institution we can provide a copy of an authorization for a TEL ACH transcation as all calls are recorded and a copy of that call can be reproduced.

What isn't clear to me is exactly what kind of documentation is required to provide proof of a WEB authorization.

What really muddy's up the waters for me is the overlap of the NACHA rules and Reg E. For example, I can't seem to find any retention requirements for retaining a copy of the authorization in Reg E, only in the NACHA rules.

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#248744 - 10/26/04 04:05 PM Re: ACH Returns
John Burnett Offline
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The record retention requirement is in § 205.13(b). The person responsible for obtaining an authorization must retain documentation for two years.

Remember that Regulation E does not require a written or similarly-authenticated authorization for a one-time transaction (TEL, some WEB transactions, POP, ARC). It only requires that an authorization be documented for pre-approved transfers from the consumer's account, and that means recurring debits. As far as Regulation E is concerned, single-entry authorizations can be authorized by a nod of the head.
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#248745 - 10/26/04 04:55 PM Re: ACH Returns
Anonymous
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What about HELOC checks that have been converted to ARC's? NACHA states that debits to loan accounts are prohibited. If the RDFI pays these items, will the ODFI still be responsible for unauthorized debits?

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#248746 - 10/26/04 06:48 PM Re: ACH Returns
John Burnett Offline
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Actually, NACHA rules indicate that ARC entries cannot be derived from credit card checks, but other loan-access checks, such as HELOC checks, are not mentioned.

It would appear that, if a HELOC check is sent in payment of a bill, and the lock box operator converts the check to an ARC, it is a legitimate transaction. What you do with the transaction once you've received it, is your decision. You may refuse it, but that could have an adverse effect on your customer.
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#248747 - 11/05/04 10:12 PM Re: ACH Returns
Anonymous
Unregistered

NACHA rules states that debits to loans are not permissable unless it is a reversal of a credit. The check is not considered transactional because it does not fall under Regulation D and therefore has no Regulation E rights. If a RDFI chooses to edit a tran code to get the HELOC debit to post the debit to avoid reputation issues with clients and then later discovers that the paid item was fraudulent negotiated, can the RDFI return the item using WSUPP & R10 or have they taken on that warranty when they changed the tran code?

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#248748 - 08/25/05 07:28 PM Re: ACH Returns
Anonymous
Unregistered

Up until recently we were returning ACH debits that originated as a HELOC check but were then converted to ACH debits. According to WesPay the decision to pay these item was up to us. We decided we would pay them but then found out that, on our system anyway, it is impossible to pay unless we pay it from a checking account and then transfer from the HELOC to cover it. If we do this, a notice will generate to the presentor regarding a change of account number to debit. Does anyone else have this problem? Do you pay HELOC checks that are converted to ACH or do you return them R20?

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