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WASHINGTON-CUNA wrote that it generally supports a NACHA (The Electronic Payments Association) proposal to require financial institutions to track merchant return rates for Telephone Initiated (TEL entries) and stop originating for merchants with high return rates in an official comment letter. CUNA favors ceasing TEL entry originations for merchants whose return rate for unauthorized TEL entries exceeds 2.5% until the reason for the excessive rate of return is fixed, CUNA Assistant General Counsel Michelle Profit wrote. However, CUNA suggested a 30-day wait before an originating depository financial institution has to report and cease originations for merchants with a return rate over 2.5%. The 10 business days provided in the proposal does not allow enough time for merchants to address the issue, according to Profit. CUNA also recommended that the 2.5% threshold be reviewed periodically because it may be too high for large financial institutions that handle a lot of automated clearinghouse items. If given 30 days to respond, Profit explained, suspect merchants should be considered in willful disregard of NACHA Operating Rule and subject to the National System of Fines. CUNA also asked that further safeguards be considered, including a hotline to inform on merchants in violation and monitoring of suspect merchants across ACH application.

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