WASHINGTON — In a comment letter to NACHA–the Electronic Payments Association–CUNA encouraged the standard setting entity to reconsider many of the provisions in its proposal on Network Enforcement Rules.
"Currently, NACHA cannot compel Originating Depository Financial Institutions (ODFIs) to stop originating ACH transactions for the highest risk users, such as customers with excessive returns," CUNA Assistant General Counsel Lilly Thomas wrote. "Expanding the enforcement procedures will help achieve NACHA's goals of ensuring high-quality ACH transactions and reducing risk while not burdening all ACH participants."
CUNA, while supporting a reporting requirement for originating depository financial institutions when return rates exceed a threshold, urged NACHA to use the rule-making process with a comment period for setting the triggers for reporting information rather than the NACHA Board. "An initial monthly return rate for unauthorized entries exceeding 1% or forward presentment or returns for unauthorized entries exceeding 500 per month per Originator/Third Party Sender has been recommended…" Thomas noted.
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"We believe that the reporting and enforcement procedures triggered when an ODFI exceeds a defined threshold are onerous and could be costly and should not be determined at the discretion of the NACHA Board. The thresholds will have a great impact on ODFIs and should be established through the rules process with the benefit of public comment."
The group also suggested NACHA not increase fines for "willful disregard" of the rules or add another category to the fine system at this time, which CUNA called "unnecessary." However, Thomas also said in the comment letter that NACHA should only apply its stricter enforcement proceedings for violations regarding a return rate over a specified threshold and not to all rule violations.
Additionally, CUNA recommended issuing a second request for comment on the method for conveying information to the financial services industry about a "suspended party."
Thomas also wrote that an ODFI responding to a request from NACHA should be granted 15 days to provide the information and NACHA should also extend the time for submitting a detailed plan for reducing its rate of returns to 15 days and extend implementation to 90 days.
Finally, she said, institutions should be given at least until December 2007 to comply with a new rule in this area but preferably until June 2008. –[email protected]
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