First and foremost, we must also acknowledge that the ACH Return feature is designed to protect both businesses and consumers, and are not designed to be ‘loopholes’ someone can simply leverage should they change their mind about making a payment.
Consumers have a 60 day window to dispute any ACH charge - this is a global rule and regulation per NACHA. No matter what interface or solution an organization could use to facilitate ACH payments, the platform must comply with NACHA Operating Rules and therefore must acknowledge that a Return is possible.
The payor is required to execute a formal Written Statement of Unauthorized Debit (WSUD) to their bank, claiming the payment was ‘unauthorized’. NACHA outlines specific criteria a WEB initiated ACH transaction (a single payment made via the Internet) must meet in order for the payment to be deemed unauthorized:
- The debit amount was different than the amount authorized by the Receiver, or
- The debit was initiated at an earlier date than authorized by the Receiver, or
- The authorization requirements of Section 2.3 (NACHA Authorization and Notice of Entries) were not met: the Originator did not capture a valid Proof of Authorization from the Receiver.
For internet-initiated ACH transactions, as of March 2021 it is now a NACHA requirement for processors like Payload to capture Proof of Authorization (POA) at the moment of payment. This is a critical insertion, especially for escrow payments, as its premise is to protect against a consumer’s ability to retract payment without facing recourse. In other words, it offers protection for the opposing entity in the event of an ill-intentioned return maneuver.
At Payload, for every ACH transaction we are capturing a NACHA compliant Proof of Authorization that can be used to protect your business in the event of an ACH stopped payment, otherwise known as a dispute, clawback, or pullback. If you've received a Stopped Payment rejection notification and would like assistance, please contact help@payload.co.