An ACH debit comes through for account #12345678 in the name of John Smith. ACH winds up on the ACH exception report b/c the account # has one additional digit added to the end. The account is a legitimate account # but the name on the account is Betty Jones. There is no additional signer on the account. What return code should be used in this situation?

Any thoughts?

R04. The account number structure for the entry is invalid (it has one too few digits). But the real message you want to deliver is that the names don't agree, so you could elect to use R03 (No account/unable to locate account).

NACHA rules also allow you to post strictly from the account number, even if the name and account don't match. But there is nothing wrong with returning as John stated.