Unauthorized Return Rate on ACH Transactions Cut In Half

Collection agencies accepting Automated Clearing House (ACH) payments should be aware of a change that went into effect last week, which lowered the threshold for unauthorized returns.

As of Sept. 18, the unauthorized return rate was lowered to 0.5%, from 1%. The rate applies only to ACH transactions, which are generally made via checks. ACH transactions require a routing number and an account number in order to be conducted. The rate is determined on a rolling, two-month basis, meaning that a collection agency could be in violation if more than 0.5% of their ACH transactions during the preceding 60 days were reported as unauthorized transactions. In the collections industry, this generally occurs when borrowers make a payment and then call their banks afterward to reverse or dispute the charge.

Companies face financial penalties and audits if the unauthorized return rate exceeds the new threshold. The size and scope of the penalties has not changed under the new rule.

The rate was lowered by NACHA, a payments association. NACHA published an infographic to help better understand how to calculate the unauthorized return rate. NACHA had announced the lower threshold more than a year ago, and payment processors have been regularly reminding their clients of the changes.

It’s likely that the lower threshold will not receive too much attention right away, because it will take at least two months from when the rule went into effect before anyone is considered to be in violation.

“We’ve received a handful of calls from customers who wanted to know what their rate was now,” said Dave Yohe, marketing director at BillingTree. “But there won’t be an immediate impact.”



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