ODFI Liability – up to 7 years

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Question:

If a customer doesn’t report an unauthorized ACH debit within 60 days of settlement, how long is the ODFI responsible for unauthorized consumer debits? Our customer couldn’t review statements, so they reported it to us outside of our return deadline.

Answer:

Up to 7 years – you read that right. An ODFI’s potential liability under the Rules for breach of warranty is not limited to the RDFI return deadlines (i.e. 60 days). It is limited only by the statute of limitations for breach of contract claims under applicable state law. For example, the ODFI’s liability for a breach of warranty extends to seven years in some states.

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