WASHINGTON - Contin-uing its push to increase credit unions' visibility with the National Automated Clearing House Association (NACHA)-Electronic Payments Association and for CUNA to be involved in the association's rulemaking affairs, CUNA has voiced in a comment letter its support for NACHA's proposed amendment to its Operating Rules concerning the time allowed for returning dishonored returns.
The proposed amendment would shorten the time allowed for returning dishonored returns from the five days currently in effect, to two banking days from the settlement date of the dishonored return entry. The rule affects those ACH items an originating depository financial institution (ODFI) returns because the receiving depository financial institution's (RDFI) return entry included incorrect or missing information.
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, wrote CUNA's Assistant General Counsel Michelle Profit.
The proposed deadline... should still provide sufficient time to process these transactions, she continued.
CUNA's comment was the consensus of the trade association's payment system subcommittee chaired by Stan Hollen, president/CEO, The Golden 1 CU in Sacramento, Calif. Since most credit unions are RDFIs and do not have merchant accounts, Hollen said the shortened time frame NACHA is proposing for returning dishonored returns will be an advantage for credit unions because it means a tighter window and a greater opportunity for them to collect on unpaid - and possibly fraudulently - written items.
CUNA also expressed its concern that NACHA's simultaneous introduction of two check truncation pilots will cause confusion and mistakes and "strains the resources of RDFIs." In the "merchant as keeper" pilot, a merchant would collect a written authorization and a completed, signed check from a consumer. The merchant in turn would use this check to initiate a one-time ACH debit entry to a consumer's account for a purchase made in-person.
In the "consumer-as-keeper" pilot the member keeps the share draft that is not completed.
"Credit unions and other RDFIs are already working under temporary rules for three different processes for share draft conversion and truncation," Profit wrote. "Until the final rules for these items are effective, credit unions are extremely limited in their ability to develop solutions to cross-reference a stop payment on a check number or control other errors they currently experience. Credit unions and other RDFIs need time to review the results of these pilots and resolve problems they encounter processing for these pilots, before a new pilot is started that is substantially similar to one already in existence.
Profit also commented that the two pilots "may impede the ability of credit unions to serve their membership...and may negatively impact the relationship between an RDFI and its customer or member."
Mary Dunn, associate general counsel for regulatory advocacy for CUNA explained that credit unions for a long time have been under-represented with NACHA. Since NACHA is a private organization and not regulated by any government agency, "if a financial is not actively part of the NACHA system, it is out of the loop on any rulemaking." Since most credit unions are affected by NACHA's ACH rules, it's crucial that they remain actively involved with the association., she remarked. -
ekingoff@cutimes.com
