We had a customer receive 10 fraudulent unemployment ACH deposits. We caught it before any withdraws were made, but my question is if we hadn't caught it and the customer withdrew half of the funds. Would the bank be required to send the full amount back or just what was left in the account?

A RDFI is not responsible for any transaction that you properly credit to an account based on the account number in the received ACH transaction. It is always the sender's problem.

That was my thought. Is there something in the NACHA rules that states this so I can provide this information?

You have a copy of the NACHA rules? It will be covered in there. I no longer have a copy so am unable to give you a citation.

look at Article 3 in Nacha (yes, the proper spelling is no longer capitalizing the entire name) Rules that covers the RDFI responsibilities...too much info to provide for citation here

The one exception to Randy's broad statement of non-responsibility for ACH items posted according to the account number included in the ACH entry is when the payment is from the federal government for a recurring federal benefit payment (SSA, VA, etc.) and the bank has knowledge at the time of the payment that the intended beneficiary has died.

I understand that the RDFI is covered under the NACHA rule 3.1.2 and I also understand as it relates to federal payments and our knowledge if the payee is deceased. With that said, due to all of the unemployment ACH fraud, we are now looking at all ACH payee and account ownership name mismatches. I thought I saw once that if we are made aware of this sort of mismatch, we are obligated to take action, is this correct?

Ex. Wife has a single account, she allows her husband's direct deposit go into the account because he can't or doesn't want an account. Once we are made aware of this, aren't we obligated to act upon it and not continue allowing the credits?

In your example, I don't know that you're obligated to act, but consider the risk of not acting. Several months from now, husband and wife are estranged and he's unable to access "his" funds in his wife's account. He blames the bank. Do you wand to handle that? Would you like it better if he files suit? Sure, you will be technically okay since it's her account and he had his pay sent there, but do you want the legal hassle? How about getting a subpoena requiring you to provide copies of activity in his account, and you don't have an account in his name?

How about the fact that he's getting banking services from the bank for nothing, and without being a bona fide customer? How are you doing to respond to a 314(a) request on him?

So, yes, you should act once you become aware of such situations. You contact your legitimate customer and tell her you can't allow her husband to have his checks deposited in an account that isn't in his name, and give her a deadline to get her husband to correct the problem, or you'll start sending his deposits back.

But I'll repeat here that there is no Nacha or UCC4A rule that requires you to look for mismatches. That's a choice you get to make. Just understand what it means when you identify a mismatch.

Permit me to pile on a little more. If you find a situation like your hypothetical example, would you do a little research to find out if the husband has been signing checks on the account as if he's a signer or owner? Would you start bouncing checks he writes going forward?

There's just so much downside risk when you knowingly allow such an arrangement to continue.

Another possibility is that the person does not want to be on the account because they are delinquent in making child support payments and they do not want to be identified or subject to a levy for missed payments.

Agreed, StevenD ^^^ and that's another strong argument for preventing these illegitimate "customers" from using your bank.