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Letters to Regulators

Proposed Changes to ACH Consumer Returns

May 17, 2004

NACHA - The Electronic Payments Association
Attn: Maribel Bondoc, Network Services Associate
13665 Dulles Technology Drive
Suite 300
Herndon, Virginia 20171

RE: Rules Work Group #53-Request for Comment

Dear Ms. Bodoc:

The Independent Community Bankers of America (ICBA)1 appreciates the opportunity to comment on NACHA's proposed changes to its ACH Operating Rules that seek to return unauthorized debits to consumer accounts that are sent improperly with corporate SEC Codes in the same manner as other unauthorized consumer entries.

Currently, NACHA Operating Rules allow a sixty-day period for consumers to review their statements and report unauthorized debits to their bank by submitting a written affidavit (under penalty of perjury). This provision is built into the descriptions of ARC, POP, PPD, TEL, and WEB entries. However, many ODFIs incorrectly send consumer debits under Standard Entry Class (SEC) Codes designed for corporate use (e.g., CCD, CTX, and CBR), which can be returned by the RDFI only two days from the settlement date.

Rules Work Group #53 has recommended that consumer debits sent with an improper SEC code be returned in a manner consistent with that of consumer applications. This change would create a new return reason code, R05 - Unauthorized Debit to Consumer Account Using Improper SEC Code, for the return of an unauthorized entry to a consumer account that improperly bears the CCD, CTX or CBR Standard Entry Class (SEC) Code, with an return time frame of 60 days, providing the consumer has filed a written affidavit (under penalty of perjury) with the RDFI.

The ICBA fully supports NACHA's Rules Work Group #53 recommendations, as they foster consistency within the rules and provide maximum protection to the consumer. We believe the proposed March 2005 implementation date is an appropriate timeframe for software providers to enhance their systems and accommodate these changes.

Thank you for the opportunity to comment. For questions regarding our position on this issue, please contact me at (202) 659-8111 or by email at cary.whaley@icba.org.


Cary Whaley
Associate Director, Payments Policy

1 ICBA represents the largest constituency of community banks in the nation and is dedicated exclusively to protecting the interests of the community banking industry. We aggregate the power of our members to provide a voice for community banking interests in Washington, resources to enhance community bank education and marketability, and profitability options to help community banks compete in an ever-changing marketplace.

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