Regulation E states that an error involving an electronic item must be reported by the customer to the bank with 60 days after the institution transmitted a period statement on which the error was listed.

NACHA rules state that electronic items in the form of POP, RCK, ARC (check conversion) must be returned within 60 days of the settlement date.

How are you disclosing this error resolution information to your customers? I am afraid that we are going to get stung on an item that the customer reports within 60 days of receiving his statement, but not within 60 days of the items settlement.

I am not overly familiar with NACHA, but it and Reg. E are two different things even if the subjects are similar.

Regardless of NACHA, Reg. E provides certain rights and remedies to the customer. Reg. E doesn't care if NACHA is tougher, so long as you follow "E's" requirements.

Similiarly, VISA and MC debit card programs don't care what Reg. E liability you impose, so long as you follow their rules.

In both examples, the consumer wins with better coverage. And that is who is protected. You can do more for the customer, not less.

Betsy: Youve found 1 of the inconsistencies between the Reg E rules and those of NACHA.

I agree w/Andy that you should always follow Reg E disclosure and reimbursement rules, but I would add that Reg E addresses how a consumer can recover ANY unauthorized electronic withdrawal OUTSIDE of the ACH system. The NACHA Rules address only how a consumer can dispute and obtain the return of an unauthorized ACH debit (ie.electronic withdrawal) performed using the ACH Network and WITHIN the ACH system rules.

In other words, if a consumer doesnt challenge an unauthorized ACH debit within the time frame set forth in the NACHA Rules, this doesnt preclude her from challenging the ACH debit (as an unauthorized electronic withdrawal) under Reg E. It just means that the time frame within which to send a request for re-credit via the ACH System has expired and the customer must file a lawsuit on the basis of a violation of Reg E or EFTA.

Ginny,

You stated that:

"It just means that the time frame within which to send a request for re-credit via the ACH System has expired and the customer must file a lawsuit on the basis of a violation of Reg E or EFTA".

What it really means is the bank is going to credit the customer and eat the loss. The bank does not have the right to place the burden on the customer just because the NACHA timing rules have been exceeded and the Reg E timing rules have not. This is one of those things under the category "risk of doing business". Otherwise the lawsuit they file will name the bank as the defendant.

Copied directly from NACHA's Operating Guidelines:

"Unlike Regulation E, which governs the relationship between RDFI and its consumer account holder, the NACHA Operating Rules address the relationship between the ODFI and the RDFI with respect to processing ACH entries. These Rules impose certain obligations and liabilities on each financial institution and provide a mechanism through which an RDFI may return an entry (including an unauthorized consumer debit entry) to the ODFI. The NACHA Operating Rules permit an RDFI to recredit a consumer for unauthorized consumer debit entry (provided the RDFI obtains a written statement under penalty of perjury from the consumer) and return the entry to the ODFI, provided the return is transmitted by the RDFI in such time as to be made available to the ODFI no later than the opening of business on the banking day following the sixtieth calendar day following the settlement date of the entry.

"Although the Regulation E and NACHA time frames are different, they are not in conflict as they do not govern the same processes. RDFIs must be aware that, in some cases, the time frame in which an RDFI may return an unauthorized consumer debit entry via the ACH Network will have lapsed before the end of the time frame in which an RDFI must investigate a consumer's claim and recredit under Regulation E. In such situations, the RDFI will be unable to use the ACH return mechanism to make itself whole and must seek reimbursement for funds recredited to the consumer directly with the ODFI." (Emphasis added)

NACHA makes it pretty clear that, even if your transaction has aged more than 60 days, you can still attempt to collect your funds from the originating [bank]. You just cannot use the ACH and its rules to do so.

John,

You, of course, are correct. I guess my real point was that it would be the bank that would have to pursue collecting via a different method than the simple ACH return process and that it would not be left in the customer's lap. With most ACH returns that we deal with that fall into this category, they are not of a significant enough value to pursue through other means.