Hi,

If a person is no longer working for a company and the company makes 2 or 3 direct deposit payroll deposits the person's checking account:

1) Can the company reverse those deposits?
2) if so, do they have to notify the person first?
3) If reversal is possible, is there a time limit as to how long they have to make the reversal?

The first part has happened to someone I know and now we are trying to figure out what to expect next. The money is just sitting there waiting to be claimed.

thanks much,

They could request a reversal but receiving bank doesn't have to comply.

I expect they will probably figure out sooner or later that this person no longer works there and when they do, they will be coming back to your friend for the funds. Has your friend notified them that this has happened? Might be wiser for them to contact the company and give the money back.

Sorry GP, but you are incorrect. If a reversing entry is done correctly, the RDFI must comply with the reversal request. You can find information pertaining to this on page OR8 of the NACHA rules. There are time limits to make this happen (midnight of 5th business date following original erroneous entry). So to answer your questions"

1) yes, if they meet the required time limits and 3 other provisions
2) yes, they must notify the receiver of the entry
3) midnight on 5th day from original entry settlement date

So sorry! What if the funds aren't there on the 5th day? Mine probably wouldn't be!

Thanks, Hap.

Can you provide a link to the cited page?

i can give a link but it won't work without online access to the NACHA rules...if you have a copy of the NACHA rules, your online code is on hte back inside cover. or, you can go to page OR-8 of the book. If going online, search for Article Two, section 2.5

The ODFI that accepts a reversing entry from an Originator indemnifies the RDFI from loss. See 2.5.2.

That doesn't mean you can simply return the reversal. It means you can pursue the ODFI legally.