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What is a Returned Item?

RETURNED ITEM – An ACH entry that has been rejected by a RDFI because it cannot be posted (i.e. account closed, no account, NSF, etc.).

Returned Deposited Items

A Returned Deposited Item (RDI) is a check that has been returned to a depositor because it could not be processed against the check originator’s account.

Deposited items can be returned for many reasons, such as insufficient or unavailable funds, stop payment, closed account, questionable or missing signature, etc.

Funds from items you deposits are made available to you, even if the item you are depositing has not cleared the bank on which it was drawn. Thus, if any item you deposit is returned to us unpaid, regardless of why it is returned, we reserve the right to debit your account for the amount of the item plus any applicable fees.

If the check you deposit is returned because there are insufficient funds in the account on which it is drawn or for any other reason, you will be responsible for the amount of the check.

NACHA RULES FOR ACH RETURNS

Even if the originator and its ODFI are authorized to reinitiate an ACH debit entry, the NACHA Rules include a very specific deadline for doing so:  No ACH debit entry may be reinitiated more than 180 days after the settlement date of the original debit entry.

The compliance department has also heard many tales about payday lenders and other businesses altering the information on a returned debit entry for purposes of disguising it and making it look like a new debit entry.  The NACHA bulletin reminds us that just as it is a violation of the NACHA rules to reinitiate a returned debit entry when the rules prohibit it, it is also a violation of the NACHA rules to alter a previously returned entry to make it look like a new debit entry.

So what are the consequences for breaking the rules?  The NACHA bulletin reminds us that all participants in the ACH network have agreed to comply with the NACHA rules, and if an ACH originator and its ODFI break the rules by reinitiating transactions too many times, or disguising transactions, they may be liable for any resulting losses to an affected credit union and its members.  If a credit union or its member is injured by the violation of any NACHA rules, the credit union can proceed by consulting with its regional payments association for advice, consulting with the ODFI to resolve the matter (ODFIs are required under the NACHA rules to investigate apparently wrongful conduct of their originators), consulting with an attorney regarding legal action, and/or (within 90 days of the rules violation) submitting a complaint through NACHA’s formal rules enforcement process, which is known as the National System of Fines and which can be found on the web here:  https://www.nacha.org/NSfines

One last point:  Credit unions and their members should keep in mind that if a member legitimately owes money to the originator, then even if the originator is prohibited under the NACHA rules from re initiating a returned item, the originator ultimately will still be able to collect from the member.   It will just have to do so outside of the ACH network.

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