During a recent audit my Operations Officer informed me that they only completed an affidavit of unauthorized ACH debits if the ACH actually hard posted to the account. If the item had not posted to the account they just put a stop payment on. Shouldn't we be completing the affidavit in all unauthorized cases. If so can you tell me where to find this verbiage in the NACHA or NWACHA (North West Automated Clearing House Association) manuals.

I don't believe you will find anything in the NACHA rules that states that the WSUPP (written statement under penalty of perjury, which replaces the old unauthorized affidavit), needs to be completed prior to the item posting. Section 7.6 (page OR23 of the NACHA rules) explains how this is to be used and in all cases prescribes its use when "the debit entry for which the Receiver is seeking recredit under this section 7.6 was not authorized by the Receiver". You can't have a debit entry or a recredit unless an actual debit has already taken place. Based on that information I would say that you are correct in placing a stop payment if the item has not posted and the WSUPP if it has.

You can use a stop payment to identify these items, but you must allow them to post to the account if you want to continue returning them R07 or R10.

I thought WSUPP was something from a Budweiser commercial?!?

I've wondered just how humorous those NACHA folks were trying to be when they came up with that acronym.

Hello!
I am bringing this thread from May back because we are currently dealing with something, and this thread was the closest thing to a discussion on the WSUPP and Stop Payments that I could find in the archives.

I'd like to hear how others are handling this situation...

A customer comes into the bank and tells you the following story:
"I authorized ABC Company to originate a recurring debit to my checking account and now I want to cancel. The next one is supposed to post in two days. I tried to call them to cancel but no one ever answers the phone...and I've tried and tried. Don't let these transactions post." Closing the account is not an option.

So? Now what? Let's set aside any discussion about Reg E here, and let's just strictly deal with the ACH situation. The transaction that is expected to post in 2 days can easily be flagged and returned using a Stop Payment. In the world of ACH, that Stop Payment order is good for one transaction only. Any further presentments by ABC Company are not technically covered by that stop payment.

So - how do we serve our customer and still follow the ACH rules?

The WSUPP cannot be signed until the debit transaction actually posts...in this case, that will be next month. Is it really 'good service' to tell your customer "Sorry - we can help you with this first transaction, but you'll have to come back in next month if it posts again to sign a form so we can return it".

We have contacted our regional ACH office about this, who in turn contacted NACHA. Our original request to UMACHA was to ask if we could be permitted to modify the WSUUP to include text that referred to "anticipated" transactions (which would allow us to have the customer sign the WSUPP and not have to come back to the bank a month later). NACHA is still thinking about a solution, although they are standing firm on the fact that the WSUPP cannot be signed until after the debit has actually posted and they're not to keen on us modifying the language (obvious liability issues if we return the wrong 'anticipated' item).

We can probably all agree that this is bothersome, and that there's no "right" answer currently. How are others dealing with this?

I should add that I have a training session scheduled next week with staff, and this is one question that the staff wants an answer to. With NACHA not acting as swiftly as I had hoped, I'm sort of panicking...whatever suggestions / solutions any of you may have would help me out!

THANKS!

Some suggestions come to mind.

First, the customer should send a certified letter with return receipt directing the Originator to cancel all future debits.

Second, if another debit comes through, have your customer sign the WUSUPP and return the item. If another item comes through, contact your ACH and find out how to pursue sanctions against the Originator or the ODFI.

Third, you've said that closing the account isn't an option. I can guarantee that you'll be rethinking that statement if you have to handle this hassle for too long. Anything is possible, and you can find ways to help the customer close and open another account, transferring other ACH items, etc., if it means keeping the customer happy.

Good luck! I know these things are never pleasant.

OK, OK! It's not a WUSUPP, it's a WSUPP! A Written Statement Under Penalties of Perjury (used to be an affidavit). But I like the sound of WUSUPP more! Got a cold one?

Thanks, John, for your fast response. I've "been away" for a while, and it's nice to see that you're still a very "rapid-reply-guy".

Anyone else? How would you help your customer? Have them sign the WSUPP and just not fill in the dates? Ignore the ACH rules and keep returing items as Stop Payment? Hmmm...

We have two forms - one is a onetime "stop" for ACH, the other is a revocation - the customer wants the ACH stopped forever. The language on each form is different and I believe on the revocation it states that the customer has to contact the originator to cancel it.

Susan - Very interesting. So...this form is sort of a "special" stop payment that you've developed? Remember, in this scenario, the customer cannot reach the originator...or are you using the WSUPP?

This form has been in our institution since 1998 (which is about the same time I joined), so I am not sure if it is a form we developed or whether we got it from another source.

In essence it states "I, (name) do hereby revoke my authorization for (company) to debit my account number (acct) at (Bank) by means of electronic transfer. (Company) has been duly informed of this request." There is a place for the customer to sign and date the form as well.

If the customer cannot reach the company by phone, a registered letter should serve the same purpose. I would think though that if they cannot contact this company, a phone call to the state attorney's office or the Better Business Bureau could be a next step also.

We do as John suggests and place a stop payment on the individual payment and then instruct the customer to mail a revoke of authorization to the originator - certified if necessary. We supply the customer with a revoke form to make the process a little easier, but the customers must fill it out themselves and mail it. It's frustrating both for the customer and for the bank when shady orginators make it difficult or impossible to complete a revoke. The bank is left in the unfortunate position of damage control by returning the items and the customer is left to duke it out with the originator.

Susan - While I think it is a logical way to handle this situation - I don't think that it conforms to current NACHA operating rules. The banks and customers are really in a no win situation and I think that most of us bend the rules a little to service the customer. NACHA has not come up with a good solution to this problem.

I think this form was developed back before NACHA had the affidavit. And since the 2002 update, I think we are getting the WSUPP signed before using a return code of R07. The revocation just clarifies the customer's intent - does the customer just want the one stopped or all further ones stopped.

cwilliams, rlcarey, & John: Do you have the customer sign the WSUPP when the customer first reports the error (prior to posting) or do you have them come back in after post? Do you use a stop as a way to "flag" the future transactions, or do you place the responsibility to monitor the account back on the customer?
(GREAT discussion...thank you so much for your continued responses!)

We don't have them sign the WSUPP at the time of the stop payment. There is always a chance that the revoke the customer sends to the originator will take care of the problem. (yeah, right). Unfortunately, we are of a size that we can't monitor this kind of thing for the customer on their behalf. So, we would wait until the next month and ask the customer to contact us if the charge comes through again. Then we would have them sign the WSUPP and would return the charges going forward each month until the problem is resolved. Not the best solution, but we are pretty much stuck in the middle with these situations.

My two cents worth - that's probably what it's worth. Since the ODFI warrants that all transactions its orginators send are authorized, timely, etc. it seems to me you can file a Rules Violation against the ODFI if the shady operators continue to originate debits.

The fines for rules violations increased and are a per occurrence for willful violations, which is what originating is after revocation of authority. The ODFI surely has the clause in the contract to pass on any fines to the customer. The maximum fine is something like $10,000 (too late in the day to look up the exact) which should get the originator's attention.