Payment Stopped: Can Payee Issue ACH for the Amount?

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Question:

A customer has currently placed stop payments on two of the customer's checks to the same company. The checks were returned to the company through the Fed. Today the company sent an ACH withdrawal to the customer's account for the combined amount of the two checks. Can they do this? We sent the ACH back to the company.

Answer:

Unless the Originator has one file an authorization for the transaction it sent, it's operating outside the ACH rules (and, if consumer accounts are involved, Regulation E).

The ACH rules allow an Originator to create ACH RCK entries to attempt to collect on checks bounced for NSF only. The RCK is issued on the theory that it's replacing the debit that the customer authorized when signing the original check.

But once a stop payment is issued, the original authority to charge the account no longer exists, and the RCK has no authority behind it either.

I believe you did the correct thing in refusing the ACH item.

First published on BankersOnline.com 06/16/03