In situations where the RDFI itself has identified an improper Reversal to any Receiver’s account, the RDFI may return the improper Reversal to the ODFI by transmitting a return using Return Reason Code R17 (File Record Edit Criteria/Entry with Invalid Account Number Initiated Under Questionable Circumstances/Return of Improperly-Initiated Reversal). Improper Reversals Identified by the RDFI (Rather than the Receiver) Improper Reversals to Non-Consumer AccountsĪn RDFI may return an improper Reversal to a non-consumer account by transmitting a return using Return Reason Code R17 (File Record Edit Criteria/Entry with Invalid Account Number Initiated Under Questionable Circumstances/Return of Improperly-Initiated Reversal) in such time and manner that the return is made available to the ODFI no later than the opening of business on the second banking day following the settlement date of the improper Reversal. The RDFI must obtain the consumer’s Written Statement of Unauthorized Debit prior to transmitting the extended return. The RDFI must transmit the return so that it is made available to the ODFI by the opening of business on the banking day following the 60th calendar day following the settlement date of the improper Reversal. Participating DFIs should be aware of the changes to Nacha’s enforcement capabilities and should consider updating and educating their customers on the changes to and potential impacts of the enforcement process.Īn RDFI may return an improper Reversal to a consumer account by transmitting an extended return entry using Return Reason Code R11 (Entry Not in Accordance with the Terms of Authorization). Lessens the risk to all ACH Network participants of experiencing egregious violations. More significant enforcement will be available to be used in cases involving outlier violations. Nacha will have the authority to better enforce the Rules for egregious violations. RDFIs that want to take advantage of the return process may need to establish policies and practices that facilitate the return of an improper reversal. ODFIs, Originators, and Third-Party Senders may want to review practices, policies, and controls regarding reversals. Recourse for improper reversals will be able to be handled through the ACH return process. The ability for RDFIs to return improper reversals will become more efficient. Originators, Third-Party Senders, and ODFIs have a clearer and more consistent understanding of when NOT to initiate reversals i n particular, with regard to the failure to fund an ACH credit file. ![]() In addition, the Rule expressly authorizes Nacha to report Class 3 Rules violations to the ACH Operators and industry regulators. The sanction for a Class 3 violation can be up to $500,000 per occurrence and a directive to the ODFI to suspend the Originator or Third-Party Sender The Rule also allows the ACH Rules Enforcement Panel to determine whether a violation is egregious, and to classify an Egregious Violation as a Class 2 or 3 Rules Violation. Involves at least 500 Entries, or involves multiple Entries in the aggregate amount of at least $500K. ![]() This Rule defines an Egregious Violation as: ![]() R17 for non-consumer accounts, 2-day return timeframeĪn RDFI will be permitted to use R17 to return an improper Reversal that it identifies on its own (i.e., not based on a customer contact), 2-day return timeframe ![]() R11 for consumer accounts, 60-day return timeframe upon receiving a consumer claim In addition, the rules explicitly permit an RDFI to return an improper Reversal: This is the same approach as the formatting requirements for Reinitiated Entries The contents of other fields may be modified only to the extent necessary to facilitate proper processing of the reversal The Company ID, SEC Code, and Amount fields of the reversal must be identical to the original entry The Rule establishes formatting requirements for reversals, beyond the current standardized use of the Company Entry Description field (“REVERSAL”): It expands the permissible reasons for a reversal to include a “wrong date” error – 1) the reversal of a debit Entry that was for a date earlier than intended by the Originator, or 2) a credit Entry that was for a date later than intended by the Originator. This Rule explicitly address improper uses of reversals.
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