New NACHA Rules Aim to Reduce Exceptions and Returns

NACHA has approved two new amendments to its operating rules to improve automated clearinghouse network quality by reducing the incidence of ACH transactions that result in exceptions and returns.

The ACH Network Risk and Enforcement Rule will help NACHA to identify and enforce rules against “outlier” originators. These outliers are responsible for the majority of exceptions and returns, which impose costs on receiving depository financial institutions (RDFIs) and can impact their customers. The new rule establishes an inquiry process, allowing NACHA to look into an originator’s ACH activity. The rule also lowers the existing return threshold for unauthorised transactions, and expands NACHA’s authority to enforce the rules related to unauthorised transactions.

Additionally, the rule establishes permissible practices for using the ACH Network to collect transactions returned for insufficient funds and other reasons. Standard information required to be included in a “reinitiated” transaction should improve the efficiency of banks’ stop payment systems.

The ACH Network Quality Rule establishes unauthorised entry fees to be paid by originating depository financial institutions (ODFI) to RDFIs for the return of unauthorised transactions. Unauthorised entry fees provide an incentive for ODFIs to implement processes with originators that reduce unauthorised transactions. The fees also will provide partial cost recovery to RDFIs for handling unauthorised transactions.

“These rules show that financial institutions can come together through private-sector rulemaking to address practices that may result in harm to consumers,” said Janet Estep, president and CEO of NACHA. “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.”

NACHA plans to provide education and resources to help ACH Network participants better understand the impact of the rules prior to implementation.


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