Rules for Paper Drafts Initiated by Telephone

Answered by:

Question:

What are the rules for a paper draft initiated by a telephone request? We had a customer on 3/7 approve a draft for 3/31 and it was debited on 3/9. We returned it unauthorized per the customer. It is not an ACH TEL so what are the rules on this?

Answer:

If you returned the item by your midnight deadline, you did so correctly. The issuer of the paper item didn't have a valid authorization until March 31, according to your customer. Be wary of a resubmission.

First published on BankersOnline.com 4/03/06