NACHA makes changes to slash unauthorized ACH transactions

NACHANACHA—The Electronic Payments Association announced on Tuesday that its members approved two new changes aimed at reducing the number of ACH transactions resulting in exceptions and returns.

According to NACHA, the amendments are part of its long-term risk management strategy and part of its ongoing efforts to bolster the ACH network.

One of the rules—the ACH Network Risk and Enforcement rule—seeks to improve NACHA’s ability to target “outlier” originators responsible for the most disproportionate levels of exceptions and returns, which cost banks and other depository institutions and their customers.

The rule lowers the existing return threshold and expands NACHA’s ability to enforce the rules related to unauthorized transactions. It also lays out acceptable practices for the use of the ACH network to collect insufficient funds-related returns.

NACHA’s second rule, the ACH Network Quality rule, establishes a method for determining an unauthorized entry fee to be paid by an originating institution to a receiving institution for the return of an unauthorized transaction.

The fee is designed to encourage originating institutions to implement processes with originators to reduce the number of unauthorized transactions. It will also partly cover the cost to receiving institutions.

“These rules show that financial institutions can come together through private-sector rulemaking to address practices that may result in harm to consumers,” Janet O. Estep, the president and CEO of NACHA, said. “In developing these rules, NACHA incorporated broad industry feedback and balanced differing perspectives from many parties. The rules represent workable solutions that can be implemented by financial institutions.”

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