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Signature on File to Authorize Recurring ACH

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With regard to recurring payments made using ACH debits, is it necessary to have a signature on file to authorize recurring ACH payments or is an electronic signature/recorded phone call sufficient documentation?

The requirement in Section 205.10(b) of Regulation E is that the authorization must be in writing, signed or similarly authenticated by the consumer. Electronic authentication is clearly permitted by E-Sign.

There is a current Comment to this section proscribing the use of "tape recordings of oral authorizations." How much effect one should give that Comment, however, is questionable. The Fed has proposed eliminating that Comment in its most recent proposed amendments to Reg. E, because of the influence of E-Sign upon the process of authentication.

A reading of the current regulation and commentary, however, does not recognize a recorded phone call as sufficient.

First published on 08/15/05

First published on 08/15/2005

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