ARLINGTON, Va. — NAFCU wants to see some changes in proposed Automated Clearing House rules.
The trade group's Regulatory Affairs Counsel Angela Meyster sent two letters to NACHA Monday, one regarding the Electronic Payments Association's proposed rule regarding ACH risk management and rules enforcement; the second covering NACHA's proposed rule regarding improving ACH network quality and reducing exceptions.
In the first letter, Meyster noted the proposed rule would reduce the existing return rate threshold for unauthorized debits from 1.0% to 0.5%. In addition, it would establish a 3.0% return rate threshold for account data quality returns and a 15.0% overall debit return rate threshold.
The proposed rule also would clarify permissible ACH debit return collection practices, apply certain risk management rules to third-party senders, and expand NACHA's enforcement authority.
"NAFCU generally supports NACHA's efforts to enhance ACH security and reduce the incidence of fraudulent and erroneous entries," Meyster wrote, adding NAFCU believes that receiving depository financial institutions (RDFI) both bear "significant" costs associated with returned entries and have the least ability to influence the frequency of returns resulting from poor origination practices. Instead, Meyster asserted, the ACH participants responsible for originating potentially fraudulent or erroneous entries, originating depository financial institutions (ODFI), originators, and third-party senders, have "greater ability" to address poor origination practices.
Meyster said NAFCU believes that the proposed rule's stricter return rate thresholds would be an "effective measure" to reduce problematic entries and supervise ACH participants. In addition, she said NAFCU supports NACHA making explicit the current implicit prohibition against reinitiating certain entries.
"NAFCU also supports the increased clarity the proposed rule would provide through illustrative examples of impermissible reinitiations and adding a specific prohibition against reinitiating transactions originally returned as unauthorized," she wrote. "NAFCU requests, however, that NACHA provide greater explanation of what would lead to a reasonable belief by NACHA than an action constitutes an attempted evasion of the reinitiation limitations."
ACH Network Quality
In the second letter, Meyster said the proposed rule on improving ACH network quality and reducing exceptions would set forth a system of economic incentives for originating depository financial institutions (ODFI) to improve the quality of their originated ACH transactions. The incentives would take the form of fees paid by the ODFI and passed through to the receiving depository financial institution (RDFI) to offset RDFI exception and customer service costs.
Meyster said NAFCU encourages NACHA to ensure that any fees assessed are at a level that "incentivizes" enhanced origination practices without reaching a level that is "unnecessarily punitive."
"NACHA should take a direct role in developing a timely and transparent system for transferring assessed fees between depository financial institutions, but should not withhold any portion of the fees for itself," she wrote.
