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ARLINGTON, Va. – NAFCU replied to NACHA’s request for comment on modifications to its operating rules with a big thumbs up. NACHA’s-the Electronic Payments Association’s-proposal would permit unauthorized entries to consumers’ accounts and incorrectly including Standard Entry Class Codes to be returned within 60 days. It would also add a new Return Reason Code, R05, for Unauthorized Debit to Consumer Account Using an Improper SEC Code. “NAFCU believes that the new R05 Return Reason Code will provide consistency throughout the operating rules with the other consumer return codes,” NAFCU’s official comment letter read. “Furthermore, the addition of a new and distinct return code will enable [Receiving Depository Financial Institutions] to clearly identify the type of return and, in turn, will provide financial institutions with a greater opportunity to track these types of entries.” Additionally, the 60-day time frame, as opposed to the current two will reduce the burden on financial institutions because consumers typically do not challenge a charge until they receive their monthly statement. NAFCU said that the additional resources necessary for “minor system changes and.minimal employee training” to adapt to the changes would be outweighed by the benefits to credit unions. “While credit unions will need to make minor operating software changes to accommodate for the new return reason code, NAFCU believes that, overall, credit unions will experience a substantial, positive impact by the proposed rule change,” the trade association concluded. “The proposed rule will result in increased ACH processing efficiency and the amount of staff time to discuss and explain these types of returns to credit union members will be reduced significantly.” The proposed implementation date is March 18, 2005, which NAFCU said should give credit unions plenty of time to conform to the changes if they are approved. In its request, NACHA also asked what other amendments related to the misuse of SEC Codes should be considered. NAFCU stated that NACHA’s Rules Work Group should contemplate imposing fines on Originating Depository Financial Institutions who abuse misused entry codes, particularly in fraudulent schemes, and requiring all ODFIs to include a phone number for all entries.

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