CUNA Comment Letter

ACH Returns Issues: ACH Operator Requirements

August 18, 2003

Ms. Maribel Bondoc
Network Services Assistant
13665 Dulles Technology Drive
Suite 300
Herndon, Virginia 20171

Dear Ms. Bondoc:

The Credit Union National Association appreciates this opportunity to comment on NACHA’s proposal regarding modifications to the current provisions of the NACHA Operating Rules (Rules) related to automated clearing house (ACH) return entries. The proposal would make the following changes to the Rules: (1) remove an ACH Operator edit related to the Original Receiving DFI (Depository Financial Institution) Identification Field within the addenda records of the dishonored return and contested dishonored return entries that is inconsistent with the definition of the field and (2) require ACH Operators to settle return entries no earlier than the effective entry date in the original Company/Batch Header Record. CUNA, a national trade association, represents more than 90 percent of the nation’s 10,000 state and federal credit unions. This letter reflects the views of CUNA’s Payment Systems Subcommittee, whose chair is Terry West of VyStar Credit Union, Jacksonville, Florida.

Summary of CUNA’s Position

General Comments

CUNA supports the proposed modification of the eleventh bullet of Return Reason Code R26 (Mandatory Field Error) to remove the ACH Operator mandatory field error edit on the Original RDFI Routing Number Field within dishonored returns and contested dishonored returns as this field is not defined as a mandatory field. We believe that modification will ensure that Appendix 2 (ACH Record Format Specifications) of the Rules is consistent with Appendix 3(Specifications for Data Acceptance).

CUNA also agrees that the Rules should be modified to prohibit ACH Operators from settling return entries prior to the effective entry date contained within the original entry. In the case of a stale or invalid effective entry date, the ACH Operators would settle the entry at the earliest opportunity. We feel it would be beneficial to the ACH Network to eliminate the float created in certain situations involving 2-day credit entries where it is possible for the return entry to be settled by the ACH Operator before the original credit entry is settled. ODFIs should not be able to receive credit for returned items that have not yet been debited from their account.

Many credit unions are able to return entries prior to the effective entry date of the original entry. Therefore, this Rules modification would cause many credit unions to have to reprogram their ACH reporting system to separate unposted ACH credit entries by effective date to ensure that items are not returned prior to the effective entry date contained in the original entry. The system would have to be reprogrammed to be able to identify 2-day credits so they can be sorted and processed differently than 1-day credits. We believe the changes would be moderately extensive and moderately costly for most credit unions. However, this will ultimately benefit credit unions and other financial institution participants in the ACH Network by making reconcilement easier and by enabling them to receive full credit for deposited funds before being required to return the entry.

CUNA encourages NACHA to extend the recommended implementation date of March 12, 2004 for the proposed Rules changes. Financial institutions, especially smaller institutions, may require more lead-time to comply with the changes in practices and software that would be required if the Rules changes became final. CUNA feels the proposed effective date may not provide adequate time for the institutions’ data processors/vendors to complete necessary reprogramming to allow institutions’ systems to identify 2-day credit entries. Therefore, CUNA suggests the implementation date be pushed back 6 months to September 2004, in order to provide sufficient time for all institutions to meet the new requirements.

Thank you for the opportunity to share our comments. If you have any further questions, please contact Mary Dunn ( or Catherine Orr ( at our e-mail addresses or at (202) 638-5777.


Mary Mitchell Dunn
Associate General Counsel

Catherine Orr
Senior Regulatory Counsel