Question & Answer

Question: We have a customer who has a direct payroll deposit credited to his account. He wanted it stopped, and the company failed to stop the direct deposit. He is furious with us! Can you tell me what our liability is under Reg E in a situation like this?

Answer: Strangely enough, Reg E doesn't do it. This would be covered under your NACHA (National Automated Clearing House Association) rules and arrangements. The liability in a case such as you have described lies with the initiating bank and their customer (the employer)-not with the receiving bank (you). You are relieved of any responsibility because you have no control over the initiation of the credit.

Copyright © 1994 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 4, No. 10, 5/94