Dispute Help Please

Posted By: Naise

Dispute Help Please - 05/12/16 02:41 PM

Our ACH Department has a case where a $10,000 ACH debit came out of our customer's account back in October. On the same day, he conducted a $10,000 transfer to cover the debit. Now he's disputing it, along with some other transactions (I think debited by the same entity) that are in total around $7,000. ACH did some investigation and found that it was the IRS that debited his account. The name on the transaction was not our customer's - it was some business that we later found out was actually owned by his son. The ACH department already returned transactions from the past 60 days that fell under NACHA.

(tl;dr - IRS debited customers account via ACH in Oct. ACH info = his son's business, not his name. Disputing transactions $$$$).

Questions - If he gave his son his account and routing number in the past, does that constitute as providing his son with an "access device" under reg E? Would that then fall under (m)(1) of the definitions?
Does the fact that we returned any debits already imply that we agreed that the transactions were unauthorized?
I think the transfer to cover the $10k back in October makes it seem like the transaction was authorized at the time - agree?

As a Compliance associate, I'm not planning to direct them on what to do but I would like to provide information on what Reg E says so they can decide. Our Legal Dept is also working on this.
Posted By: Andy_Z

Re: Dispute Help Please - 05/13/16 09:14 PM

The fact that the son had the account info is not to be confused with authorization to debit the account, so I believe your question is moot. This isn't dissimilar to evergreen authority when a debit card is loaned, but then retrieved. It isn't evergreen. That's a myth unless the consumer doesn't retrieve the device or call the bank.

If the son gave the account info in an attempt to "steal" from dad to get the IRS off his back, that's theft in my mind. But unless dad is really well off, he didn't miss $10K for the last 7 months? I'd bet dad knew, but sonny promised repayment and hasn't. I'd let dad know you will (assuming you will) pursue this thru the police.

I don't know if there are any ACH remedies. Others will have to opine.
Posted By: BetsyS

Re: Dispute Help Please - 05/18/16 08:43 PM

Even though it's past the return time frame, you might have some recourse for a warranty claim. Under NACHA rules, Originators must obtain an authorization. If it's a consumer account and a debit entry, it must be signed or similarity authenticated. I'm not sure about Fed payments, but they generally follow NACHA rules. I would request a copy of the authorizations if possible and go from there. Your regional ACH payments association should be able to answer questions and assist in filing any claims.