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ACH Return Process – Consumer vs. Commercial Transactions


By Val Vought, CRCM, CCBCO

The ACH Network requires that financial institutions be bound by a plethora of rules, regulations and agreements including the following; when originating or receiving ACH transactions:

  • NACHA Operating Rules;
  • Regulation E (for consumer transactions);
  • Article 4A of the UCC (for corporate transactions);
  • Deposit account agreements provided to the account holder;
  • Customer authorizations;
  • Originator agreements;
  • Cash management agreements.

A good understanding of these requirements is essential for ACH functionality and processing.

Key Areas
One essential element of the ACH process is distinguishing the differences for returning ACH transactions on consumer and commercial accounts. The return process varies significantly, as return for a commercial transaction (CCD) must be completed within 24 hours of settlement. Financial institutions should counsel all business account owners to monitor the account(s) daily. If the Bank is not notified by the company within 24 hours of posting, the entry will become the liability of the account holder. Resolution may have to be settled between the parties involved and not within the banking system. In most cases, the appropriate return reason code R29 – Corporate Customer Advises Not Authorized should be used.

The consumer entry (PPD) that is unauthorized may be returned within 60 days of posting to the account. If the receiving Bank receives a dispute for an authorized debit, the Bank must obtain a Written Statement of Unauthorized Debit from the account holder prior to returning the ACH entry. The form is used to report and dispute a fraudulent or unauthorized ACH transaction and should not be used to place a permanent stop payment on an entry(s). In most cases, the appropriate return reason codes are R07 – Authorization Revoked or R10 – Customer Advises Not Authorized.

Action Plan
Maintaining adequate and effective policies and procedures help to ensure compliance with all applicable rules and regulations. Bank personnel should also receive ACH training, preferably annually, to stay abreast of rules changes and other compliance issues.