We have a customer who is disputing a transaction coming through her account today. I know we can't put a stop payment on it (because we didn't get 3 days notice).

The transaction itself is a PPD from a payday loan company trying to get their money back. We see many previous transactions approved by this company, but I'm assuming we have to open a Reg E claim anyways.

First question...it showed up on our non-post today because of an invalid account number, (which previous debits from this same company have done in the past and have been put through at the customer's request). Do we put it through today and then wait until tomorrow to return it unauthorized? I kind of want a trail of it hitting the account, but don't know if that even matters.


Won't the company just resubmit the request for payment at a later time?

I'm trying to help the ops team and am a bit confused...thanks for your help!

I don't know much about the payday lenders, but just have a couple comments:

Do you know that the repayment agreement stated the company would ACH the account? Just because the customer owed them money doesn't necessarily mean the debit was authorized. It's possible they agreed to different repayment terms, and when your customer didn't follow through they just decided to debit the account. I guess I'd get more information about that before I denied the claim.

Actually, PPD transactions can be subject to stop payments under NACHA rules if the stop order is received soon enough for the bank to act on the order.

The 3-day advance notice requirement found in Reg. E (and, interestingly, in NACHA rules too) mandates the acceptance of a stop order with the advance notice. NACHA rules make it clear that you have the OPTION to accept a stop order later than that, if you can return the item within your return item deadline.

As you've gathered, the payday loan company can submit another debit unless your customer revokes her authorization for them to debit the account.

If you customer challenges a PPD to the payday lender after the fact (too late for a stop), alleging non-authorization, you have to open the case, make your decision (I assume it will be that the customer authorized the EFT), issue your determination and move on. Part of moving on may well be to sever your deposit relationship with this individual.

Thanks so much!

Just out of curiosity (I'm still trying to figure out the operations side of processing Reg E claims, because we haven't had many-knock on wood ).

If we decide to pay the claim, what is our liability down the road if the customer actually did authorize the transfer? We have the WSUPP, does that protect us?

IMHO, it covers you. I imagine that the only time it could come back to bite you is if it could be proved that you knowingly accepted a false WSUPP.