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WASHINGTON-CUNA strongly opposed suggestions included in a recent request for information by NACHA-The Electronic Payments Association-on automated clearinghouse returns that include a Standard Entry Class Code that is invalid for the account type or which the Receiving Depository Financial Institution believes may be fraudulent. NACHA specifically asked if a return reason code should be created for when an SEC Code is determined to be invalid for the account type by the RDFI or the RDFI believes it is fraudulent. CUNA was opposed both ideas. First, if a return reason code was created and the ACH was automatically returned solely for a wrong code and the member intended that the debit be paid, the return could result in late charges and other punitive measures for the consumer. “The member is the innocent party in that they have no control over what SEC Code is used by the Originator. The member would be very upset about a legitimate entry/debit being returned and would not understand the significance of the SEC Code; they would certainly complain to the credit union,” CUNA’s letter read. “This, in turn, would harm the credit union from a member relations standpoint.” Additionally, this type of return would require more time, including extra time for the consumers’ affidavit, which CUNA suggests should be required. CUNA also pointed out that an RDFI could be opening itself up to litigation if it mistakenly returns a legitimate entry as fraudulent. CUNA added that making a fraud determination without consulting the member would be difficult and if the consumer is to be contacted, the RDFI should contact the Originating Depository Financial Institutions to look into the originator. Finally, CUNA recommended adding two new return reason codes, including one for returning an unauthorized corporate entry initiated to a consumer account and another for returning an entry with an invalid SEC Code for the account type.

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