EFT - Once and Future Stop Pays

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Question:

I recently read in some training that we did that if an EFT has a stop payment put on it that it will stop any and all future transactions for any amount of time until the customer contacts the bank and asks them to resume payments. Is this true, or can we place a normal stop period of six months on an EFT like we would for a paper item or check?

Answer:

If the customer is a consumer and he or she states that the authorization for the payments has been canceled, Regulation E, in Interpretation 2 to subsection 205.10(c), requires the institution "must block all future payments for the particular debit transmitted by the designated payee-originator." As noted in the Interpretation, you "may confirm that the consumer has informed the payee-originator of the revocation (for example, by requiring a copy of the consumer’s revocation as written confirmation to be provided within 14 days of an oral notification)." If you don't get the required copy within 14 days, you can lift the stop.

Unlike the UCC stop provision on paper items, and NACHA's stop payment rules on ACH items, there is no "term" in Regulation E for the stop order in this particular circumstance. That stop is permanent.

First published on BankersOnline.com 10/23/06