The National Automated Clearing House Association (Nacha) has released guidance regarding ACH transfers in light of COVID-19. Nacha reminds financial institutions of the importance of reviewing their business continuity plans to ensure that they are prepared to maintain ACH payment processing capabilities in the event of possible disruptions. The Rules permit a financial institution to delay performance of its obligations under the Rules beyond required time limits if the delay was caused by the interruption of communication or computer facilities and the delay was beyond the reasonable control of the financial institution seeking the excused delay. Whether a delay is beyond the reasonable control of the party asserting an excused delay must be determined based on the available facts and circumstances surrounding the delay, including whether the financial institution exercised the level of diligence required under such circumstances. A delay caused, in whole or in part, by the failure of a financial institution to maintain or implement an appropriate business continuity plan is not excused under the Rules for that financial institution.
In addition to guidance, Nacha is providing relief for deadlines and violations of certain ACH Rules. Financial institutions may be experiencing a higher than normal rate of returns from preauthorized debits due to insufficient funds in its customers’ accounts, customers placing stop payment orders on the debit, or filing a claim that they no longer have access to or have cancelled a service. Nacha is providing relief for potential Rules violations on these elevated return rates and levels on a case-by-case basis. Some of the items Nacha will consider, among other things, include whether the debits were in fact properly authorized using good authorization practices, whether the authorizations remained effective in light of any intervening circumstances, whether the Originator clearly communicated with its Receivers with respect to ongoing debits, and whether the Originator had prior history of elevated return rates.
Nacha is also providing relief to the requirement that the Written Statement of Unauthorized Debit must be in writing and signed or similarly authenticated by a consumer. Due to the reduced on-site staff of financial institutions and the social distancing orders, Nacha will not enforce the signature/similar authentication requirement until further notice. Nacha is also encouraging RDFIs to consider if (1) RDFIs can direct consumers to report unauthorized debits by remote channels (e.g., online and by telephone). RDFIs that have the ability for consumers to similarly authenticate signatures by these remote channels should continue to do so; (2) before submitting a return, RDFIs should continue to take reasonable care to have the consumer verify claims of unauthorized ACH debits consistent with signature-based procedures to avoid improper returns; and (3) the existing extended return timeframe of 60-days for claims of unauthorized debits to consumer accounts still applies.
Lastly, Nacha is providing temporary relief from deadlines of certain documentation required by the Rules, for instance an ODFI must provide an RDFI with proof of a Receiver’s authorization within 10 Banking Days of receipt of the RDFI’s request; an ODFI is required to provide a copy of a source document for certain check-related ACH entries or item for a represented check entry within 10 Banking Days of an RDFI’s request; and an RDFI must provide an ODFI with a copy of a consumer Receiver’s Written Statement of Unauthorized Debit within 10 Banking Days of receipt of the ODFI’s request. For the duration of the COVID national emergency, Nacha will refrain from recommending enforcement penalties for cases in which these authorizations, source document/item, or Written Statement of Unauthorized Debit is provided after the existing 10 Banking Day time frame but within 20 Banking Days. In addition, Nacha’s Rules enforcement process can accommodate short extensions of required violation responses on a case-by-case basis.
Nacha has outlined guidance and relief measures, among others, in its FAQs.