ACH debits wipe out account of deceased

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Question:

We have an individual account that has been receiving recurring ACH debits monthly. The account owner died 6 years ago. The bank just found out about the death only days ago. No personal representatives have come forward or are known to contact. The most recent ACH debit was paid and overdrew the account. The account has now been overdrawn for 45 days. Can we return the ACH debits that occurred after the date of death? Although the debits have been occurring for years, the bank just became aware of the death of the account owner.

Answer:

You can make a case that the authorization for the transfers ended when the customer died, but Nacha Rules do not provide a mechanism for returning a transaction more than 60 days old (counted from the settlement date). You indicate the account has been overdrawn for 45 days. That suggests that returning the one most recent debit entry could restore the account to a positive balance. It would also put the Originator of the recurring debits on notice that they cannot continue charging the account.

It should be unusual to have an account in which there is no activity for six years other than a recurring ACH debit. Does your bank's AML monitoring program (manual or automated) check for that sort of pattern? Can it be adjusted to alert someone of similar activity?

Finally, you haven't indicated what the recurring debits appear to be for. Discuss the case with your BSA or fraud folks. It might be something worthy of a SAR filing, depending on the dollars involved.