WASHINGTON - It's a situation too many CU members deal with: they write a check but the item is not posted to their account. The source of the problem is in the ACH conversion process, and it's a problem the National Automated Clearing House Association (NACHA) is trying to resolve.
CUs and other financials that don't handle their own item processing and use `payable through' are particularly vulnerable to lost ACH items or "administrative returns", explained CUNA Assistant General Counsel Michelle Profit. The financial institution converting the check into an ACH items reads the MICR line correctly from the check, but the receiving institution doesn't recognize where to direct the check or post the ACH item.
Administrative returns can also occur if a financial uses one routing number for ACH and another for drafts, or if it has complicated rules for converting the account number in the MICR line to an actual account number.
CUNA estimates that administrative returns represent 1.7% of all ACH transactions if there is an existing relationship between the consumer and the merchant and 6.48% if there's no former relationship.
Last year, CUNA, Navy FCU and other financials joined with NACHA on a task force dedicated to finding a way to reduce the number of administrative returns and to increase the reliability of the ACH system. Profit said the task force has completed a draft of a white paper on the issue that will be discussed and voted on at NACHA's Electronic Check Council Meeting Feb. 16 and 17 in Ft. Lauderdale, Fla.
"NACHA is really reaching out to credit unions on this issue and is making every effort to make sure they're represented on it," Profit said. She urged credit unions to comment on NACHA proposals to make sure the association does not adopt rules that are credit union-unfriendly. -
ekingoff@cutimes.com
