CUNA Comment Letter

Reduced Time Frame for Corrected Returns

Via e-mail
February 11, 2000

Ms. Debbie Barr
Assistant Director of Network Services
13665 Dulles Technology Drive
Suite 300
Herndon, Virginia 20171

Dear Ms. Barr:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on NACHA's proposed amendment to the NACHA Operating Rules (Rules), which would shorten the time allowed for returning dishonored returns to two banking days from the settlement date of the dishonored return entry. As a national trade association, CUNA represents more than 90 percent of the nation's 11,000 state and federal credit unions and solicits the opinions of these credit unions on relevant matters.

Under the current Rules, the time to completely process a return may be fairly lengthy. An originating depository financial institution (ODFI) may return an ACH item that a receiving depository financial institution (RDFI) has returned. If the ODFI sends the RDFI a dishonored return because the return has missing or incorrect information, then the RDFI must send the corrected return within five banking days of settlement of the dishonored return. The new rule would reduce the time the RDFI has to send a corrected return to two banking days from the settlement date of a dishonored return.

CUNA supports this proposal because the shortened time will reduce potential risk within the ACH network. This shorter time frame will reduce the ODFI's risk of not collecting items by providing them earlier notice of a return and, as a result, will give them more time to collect the unpaid item from a consumer.

The proposed deadline, which will give RDFIs less time to process corrected returns, should still provide sufficient time to process these transactions. For example, the two-day time frame is all the time that is allowed for RDFIs to resend a return that an ODFI dishonored because the original return was late. Since there is little difference between processing any dishonored return, the time frame provided for processing one type of dishonored return should be sufficient time for processing another. Indeed, some credit unions process these transactions within a day of settlement.

For all the reasons stated above, CUNA supports this proposed amendment to the Rules. If you have any further questions, you may contact Michelle Profit at (202) 682-4200.


Michelle Q. Profit
Assistant General Counsel