CUNA Regulatory Comment Call


July 29, 2003

ACH Returns Issues
Invalid SEC Codes and Fraudulent Entries

EXECUTIVE SUMMARY

QUESTIONS REGARDING THE REQUEST FOR INFORMATION

  1. If the Rules were amended to create a return reason code for an SEC Code that is not valid for that type of account and allow the RDFI to return the entry through the ACH Network, what would be the impact on payments that the Receiver desires to be made but are incorrectly coded? (If the RDFI returns such a debit, it could adversely impact the Receiver who had intended a debt to be paid.)

    Please explain the impact.
















  2. Would a return for an SEC Code that is not valid for that type of account require an extended return time period and the written statement under penalty of perjury that is usually associated with the extended return time frame?

    Yes ______ No ______

    Please explain why or why not.
















  3. If the Rules were amended to create a return reason code to allow an RDFI to return an entry it believes is fraudulent, how could the RDFI determine that the account-holder did not intend for the ACH entry to happen?

    Please explain.
















  4. If the RDFI returns a debit, could it adversely impact the Receiver who had intended a debt to be paid?

    Please explain.
















    How could the RDFI determine an entry is fraudulent, rather than ascertaining from its customer simply that the entry was not authorized?

    Please explain.
















  5. Could there be legal repercussions from an RDFI making a judgment call on the legitimacy of an ACH entry?

    Please explain.
















  6. Other comments?
















Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com