NACHA’s Rule to Address Excessive Transaction Return Levels Goes into Effect

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The ACH Network Risk and Enforcement Rule will help improve the overall quality of the ACH Network by reducing the incidence of ACH transactions that result in exceptions and returns.

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The Rule demonstrates the value of the financial industry coming together through private-sector rulemaking to address practices that may result in harm to consumers.

NACHA—The Electronic Payments Association® announced that the ACH Network Risk and Enforcement Rule goes into effect today. The amendment to the NACHA Operating Rules will help improve the overall quality of the ACH Network by reducing the incidence of ACH transactions that result in exceptions and returns.

“This Rule amendment is part of NACHA’s ongoing efforts to maintain and improve the strength and quality of the ACH Network for the consumers, governments, businesses and financial institutions that move their money via ACH,” said Janet O. Estep, president and CEO of NACHA. “The Rule demonstrates the value of the financial industry coming together through private-sector rulemaking to address practices that may result in harm to consumers.”

The ACH Network Risk and Enforcement Rule improves NACHA’s ability to identify and enforce the Rules against “outlier” Originators that may be responsible for the highest and most disproportionate levels of exceptions and returns, which impose costs on Receiving Depository Financial Institutions (RDFIs) and can impact their customers.

The Rule lowers the existing return threshold for unauthorized transactions from 1.0 percent to 0.5 percent, and expands NACHA’s authority to enforce the Rules related to unauthorized transactions. The Rule also establishes an inquiry process that can be used when an Originator or Third-Party Sender exceeds an administrative return rate level of 3.0 percent and/or an overall return rate level of 15.0 percent. While exceeding these new return rate levels is not automatically considered a violation of the NACHA rules, Originators and Third-Parties can be required to reduce their return rates when an inquiry shows that poor origination practices have resulted in excessive returns.

Additionally, the Rule defines permissible practices for use of the ACH Network to collect transactions that were previously returned for insufficient funds and other reasons, and outlines standard, required information to be included in a “reinitiated” transaction.

“Excessive levels of returned transactions impose costs, both financial and reputational, on the ACH Network and its participants,” said Estep. “The new Rule will help reduce these costs, and ultimately increase customer satisfaction with the ACH Network by reducing the volume of transactions subject to customer disputes.”

For more information about the ACH Network Risk and Enforcement Rule, or for resources to support implementation, visit the NACHA website. Also visit https://www.nacha.org/rules/rulemaking-process for information about NACHA’s rulemaking process.

NACHA — The Electronic Payments Association
Since 1974, NACHA – The Electronic Payments Association has served as trustee of the ACH Network, managing the development, administration and rules for the payment network that universally connects all 12,000 financial institutions in the U.S. The Network, which moves money and information directly from one bank account to another, supports more than 90 percent of the total value of all electronic payments in the U.S. Through its collaborative, self-governing model, education, and inclusive engagement of ACH Network participants, NACHA facilitates the expansion and diversification of electronic payments, supporting Direct Deposit and Direct Payment via ACH transactions, including ACH credit and debit payments, recurring and one-time payments; government, consumer and business transactions; international payments, and payments plus payment-related information. Through NACHA’s expertise and leadership, the ACH Network is now one of the largest, safest, and most reliable systems in the world, creating value and enabling innovation for all participants. Visit nacha.org for more information.

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Kendra Beasley
NACHA - The Electronic Payments Association
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