ACH Basics

Get answers to some common ACH questions

  1. What’s the difference between effective entry date & settlement date?
  2. How many days does a business have to return a WEB or TEL?
  3. How should you return something coming to a Bank’s bank account(i.e., G/L or Money Order account)?
  4. How do you return a credit?
  5. Are we (the RDFI) liable if a tax refund goes (automatically) into the wrong account?
  6. We (the ODFI) received an item back R10, but do have a proper authorization. Can we dishonor it back to the RDFI?
  7. A customer notified us their account has been debited (without authorization) for more than 60 days. What do we do? Do we have to give them their money back?
  8. How do I return an entry that my customer advises is fraudulent
  9. Do I have to return a transaction when the account number and name do not match my account records?
  10. If an ODFI sends a prenotification entry on a single entry transaction (i.e., WEB, TEL, RCK, POP, ARC, BOC), must the RDFI process an NOC if any of the payment information is incorrect?

1) What’s the difference between effective entry date & settlement date?

The Effective Entry Date is the date the Originator intends the transaction to settle. The Settlement Date is the date the ACH Operator assigns when funds actually are transferred. The Rules intend they be the same date, but in some cases the Effective Entry Date is a date earlier than the Settlement Date. The RDFI should post entries based on Settlement Date only.

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2) How many days does a business have to return a WEB or TEL?

60 days from settlement date, if the reason for return is "unauthorized."

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3) How should you return something coming to a Bank’s bank account(i.e., G/L or Money Order account)?

R20 Non-transaction account.

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4) How do you return a credit?

R23 Credit refused by Receiver.

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5) Are we (the RDFI) liable if a tax refund goes (automatically) into the wrong account?

No, the ODFI warrants the account number is correct. The RDFI may rely on the account number provided with the transaction in posting the entry.

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6) We (the ODFI) received an item back R10, but do have a proper authorization. Can we dishonor it back to the RDFI?

No, since the RDFI returned this entry based on a Written Statement Under Penalty of Perjury. The ODFI and Originator must settle the matter with the Receiver outside the ACH network.

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7) A customer notified us their account has been debited (without authorization) for more than 60 days. What do we do? Do we have to give them their money back?

Return the items within 60 days of settlement date as R10.Beyond 60 days conduct an investigation to see if the transaction posted according to the information originally received. If so, you did not commit an error (sec 4.1.4), and it becomes a customer service issue and optional to refund them or send them to the Originator.

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8) How do I return an entry that my customer advises is fraudulent?

The ACH rules do not contain a return code for "fraudulent" transaction. The ODFI warrants that entries originated are properly authorized. The Receiver, if a consumer, could sign a WSUPP and instruct the entry be returned "unauthorized." Alternatively, as an RDFI, you can require the ODFI to provide a copy of the authorization for transactions to consumer accounts by submitting a written request to the ODFI. They must provide the requested copy within 10 banking days of receipt of the written request.

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9) Do I have to return a transaction when the account number and name do not match my account records?

No, the rules provide that when the name and account number do not match your records, you may rely solely on the account number for posting of entries. However, you may return the entry if you wish—the appropriate return code would be R03-"No Account/Unable to Locate."

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10) If an ODFI sends a prenotification entry on a single entry transaction (i.e., WEB, TEL, RCK, POP, ARC, BOC), must the RDFI process an NOC if any of the payment information is incorrect?

No. The RDFI is never obligated to originate an NOC on any transaction. It is an option available to the RDFI to provide correcting information to the Originator, and is recommended on recurring transactions. It is a matter of choice if the RDFI wishes to respond to a prenotification on a single-entry transaction.

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