Question & Answer

Question: What's the time frame for returning an ACH debit? We have a customer that wires out funds several times a week and his account is now overdrawn. We're looking to recover.

Answer: According to the supervisor at the Federal Reserve Bank, the ACH is only slightly different from the requirement of Regulation J - it's midnight of the day following the day of receipt, or settlement - whichever is later - in the case of an overdraft. This time frame is because you have the knowledge that the debit is against the account, which is overdrawn. You have knowledge of the transaction at the time of debit.

In the case of a customer informing you the debit was unauthorized, you have 60 days, according to our contact at Fed. You can attempt to return it during that time, however the other financial institution may choose to dishonor the return as being untimely. Then it is on a case-by-case-work-it-out arrangement between you and the other institution. The originator needs to know at some point that the payment is final.

Copyright © 1998 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 8, No. 3, 3/98