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Regulation E and ACH represented check entries

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One of our consumer customers overdrew her account and we returned the check unpaid. The payee converted it to a represented check (RCK) ACH entry that we paid. Our customer claims the ACH entry wasn’t authorized. Should we handle her claim as a Regulation E error claim?

No. An RCK conversion entry is one of the ACH entries that are not included in Regulation E’s definition of “electronic fund transfer.” Therefore, it won’t be subject to the consumer protections of the regulation. There are, however, minimal authorization requirements for the RCK ACH entry. The Originator has to display a notice that it may collect the amount of the check electronically before receiving the check from the Receiver (check issuer).


Learn more about John's webinar Managing Unauthorized ACH Items

First published on 07/03/2016

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