Recently, we had an ACH issue where duplicate files (2 files) were sent out. We did a reversal the next day on one of the files. We have a business customer that was doing payroll and two of their employees immediately pulled all the money out of their account before the reversal hit which included their actual direct deposit and the duplicate. Two days after the reversal file, the other FI sent the reversals back insufficient funds. Our customer wants us to send a reversal file effective dated two days from now to debit their employees accounts (basically their pay day). We cannot do a reversal can we? Won't the customer need to initiate ACH debits on their end?

Under subsection 2.12.5.1 (Dishonor of Return by ODFI), paragraph (h), your bank, as ODFI, may dishonor a return of the debit Reversing Entry that was intended to correct a credit Erroneous Entry, if you have not received a Return of that credit Erroneous Entry. But to do so, you have to transmit the dishonored Return Entry to your ACH Operator (e.g., the Fed) within 5 Banking Days after the Settlement Date of the Return Entry. However, the RDFI can contest your dishonor by rejecting it, and you can't act further other than to charge the rejected entry back to your customer.

If you can't do the dishonor (because more than 5 banking days have elapsed) or if your dishonor is rejected, your Originator customer will need to sort this out with the employees directly.

We are still within the 5 day timeframe to try dishonoring the return, so we are doing so today. Fingers crossed. Thank you so much for your help!!

at the end of the day, the question is "did the bank goof or did the customer?" if the bank did, you will have to determine if you want to try and collect the outstanding items from your customer to make you whole, or write it off. if the customer goofed, they should be having a conversation with their employees who have been double paid about giving the extra back, they know they are not entitled to it.

having been through this exercise more times than i care to think about, i can pretty much guarantee the RDFI will contest the dishonored return, so you will still have the outstanding amount.