I am not familiar with NACHA rules and am seeking guidance -
A customer called in today with a small (less than $10) ACH charge that was unauthorized on their account.
When looking further, our ACH department had to manually input this transaction, as the account number was wrong (not transposed - last 4 digits were all wrong. Original account number does not exist) - department relied on the account holder name to find acc. and debit.
Settlement date was 4/1/2025.

1) Was our ACH department right in debiting the account with a wrong account number, but instead relied on the account holder name?
2) If we submit an R05, does the merchant have the chance to "represent" with documents? Or can they just decline?
3) Going forward, if the account number is wrong / doesn't exist (like in this case), is it regulatory required to return the ACH?

I have only worked with debit card fraud, so ACH is new to me. Any assistance is appreciated
Thank you

1) Not sure why you would bother researching for a debit to an account. Especially for $10.

2) Not sure how you can use R05 Unauthorized Consumer Debit using Corporate SEC Code Entry. Plus, you have lost your window for a normal return. Additionally, posting this entry to your customer's account is your own fault.

3) Required - no, but you then are assuming a lot of risk.

Thanks for the fast help, Randy.
I was inquiring to learn for future cases that may be larger dollar amounts, since our ACH department said it was normal to use an account name in support of a mismatched/invalid account number.
When searching online for RO5, I read "Unauthorized Consumer Debit" and ran with it- thanks for clearing this up.
Not to say I wasn't too worried about $10, but I really didn't want to run into a bigger dollar amount later on and not know procedures.

Thanks again!

1. Nacha rules allows you to solely post from account number, but you have the ability to look at rejected transactions to correct if you are able to determine the true recipient. now, if you have 25 clients named John Doe, you're going to have a hard time determining which one is correct. but if the name on the account is Heinrich Lieberman then chances are you only have 1 and can post like that by name. but you are not required, you are free to return using uing R03 - no account, unable to locate account, where the account number is valid for the bank but does not meet the customer name.

2, you should not be using R05 for this return, your client has said this is unauthorized, so you should be returning using r10 - customer advises not authorized, they will need to complete a WSUD.

3. if you have an item coming in that does not match a customer account, why would you not return it? you're just going to randomly debit a customer? Use R03 as noted above to return.

Your ACH department should have written procedures to handle routine ACH issues such as this, and the A in ACH stands for Automated, so I would steer them towards eliminating the manual lookup and manual posting and let the automated process work. if the account is not valid, the item is returned next day, no questions asked.