What (if any) are the risk to an institution that posts ACH transaction to a customers "other account" if the account the ACH transaction comes in on is closed/dormant, NSF, uncollected?

Customer comes into the bank and wants to redirect an ACH to another accoutn at the Bank. Must an institution require a signed WSUPP in all cases of this type. Once a WSUPP is signed should an institution require the customer to notify the originator or can the bank just issue a NOC on the next ACH that is received once the WSUPP is signed?

I would have the affected customer complete a new WSUPP as well as contact the originator of the proper account to deposit the funds. What if the ACH was coming from the SSA for a deceased customer? There are proper procedured for handling the return of these funds so the procedures need to be universal.

What is your purpose in obtaining a WSUPP? A WSUPP is used to claim that a transaction wasn't authorized or that there is some other fault with the transaction that calls for a return of a debit (generally under the extended period adjusting entry rules). It's not designed for redirecting ACH items to a different account of your customer.

If the transaction should be returned for closed/dormant, NSF, etc., you only get one day to return it, and a WSUPP isn't needed. If the transaction should be redirected (it came in to a closed account and should be changed to a new account, or the account number's wrong), and you have the correct account information, use a NOC and force-post the item to the correct account. The Originator should respond to the NOC by correcting its records, but don't count on that happening. You should also tell your customer to contact the Originator directly to effect the change for future entries.

JOhn:

Your rsponse is how I see it, we use it in the manner you have stated; however, one of the issue we have is we receive many ACH with incorrect account numbers or with valid account numers but they are closed and a customer has another account with us....what I'm realy asking is: If an ACH does come in to a closed account and the customer has another account with the FI, can (or should) the bank post the transaction to the new account without the customers permission, or return it. Currrently, when a customer comes into one of our branches and directs us to post his next ACH to his other account we do so and tell tem to notify the originator, I have no problems in doing that as we would post it and send the NOC, but what if the FI has not been received any instructions from the customer should we be posting ACH's arriving on closed accounts to their other accounts or return them. Also, if customer instructs us to post to new account and we send the NOC, wat do FI's do the next month when the same ACH arrives again to the closed account, should we posit and NOC again or return. MY feeling is posting to other accounts without the custmers permision just leads to lawsuits and the possibility fo Banking Commissioners getting involed on behalf of customers. Any idea on what the general consensus is in the industry on handling ACH;s on closed/dormant accounts and posting to other customer accounts with an FI?

I suggest the following:

• If the customer asks you to post the item to a different account, try to get it in writing and ask that it indicate whether the change is one-shot or permanent
• If the change is to be permanent, tell the customer you will attempt to notify the Originator of the change, but the customer should do so as well
• Also tell the customer that you'll allow 30 days for the change to be made by the Originator, but any items with the old account number after that will be returned.
• If the customer doesn't give you the request in writing or doesn't say the change is permanent, tell the customer that subsequent items with the wrong number will be returned
• If the Originator fails to correct the item after you've sent two NOCs, send the next item back
• Don't assume the customer wants to have items changed if they come in with old numbers. The customer may be using a new account to avoid an Originator that won't stop sending.
• Train your customer service poeple to ask pointed questions about recurring ACH items when a customer closes an account.