2024 NACHA Rule Update

Recently, developments have been made concerning NACHA’s efforts to combat fraud in credit-push payments.

 

NACHA has recently introduced a comprehensive set of new rules under its “Risk Management Framework for the era of Credit Push Fraud.” These rules aim to mitigate the occurrence of fraudulent activities associated with credit-push payments. It’s crucial to note that there are two distinct sets of rules with different effective dates: June 21, 2024, and October 1, 2024.

 

The first set of rules, effective June 21, 2024, covers several minor but significant topics, including:

 

  • General rule for WEB entries: all consumer-to-consumer credits, regardless of how the consumer communicates the payment instruction to the ODFI or P2P service provider must be coded as WEB.
  • Definition of Originator: expand the definition to identify the Originator as the party authorized by the Receiver to credit or debit the Receiver’s account at the RDFI.
  • Originator Action on Notification of Change: give Originators discretion to make NOC changes for any Single Entry, regardless of SEC Code.
  • Data Security Requirements: revise wording of this section to separate out compliance obligations for parties already covered by the rule from those meeting the threshold for the first time.
  • Use of Prenotification Entries: align the prenote rules with industry practice by removing language that limits prenote use to only prior to the first credit or debit entry. – Clarification of Terminology- Subsequent Entries: replace references to “subsequent entry” in Article Two Subsection 2.4.2; Subsection 2.6.2 and Subsection 2.12.1 with synonymous terms to avoid any confusion with the now-defined term.

 

 

The second set of rules, effective October 1, 2024, introduces the following amendments:

 

  • Codifying Expanded Use of Return Reason Code R17: allow, but not require, an RDFI to use R17 to return an entry that it thinks is fraudulent and also add new defined term “False Pretenses”.
  • Expanded Use of ODFI Request for Return/R06: expands the permissible uses of the Request for Return to allow an ODFI to request a return from the RDFI for any reason.
  • Additional Funds Availability Exceptions: provides RDFIs with an additional exemption from the funds availability requirements to include credit entries that the RDFI suspects are originated under false pretenses.
  • Timing of Written Statement of Unauthorized Debit: allow a WSUD to be signed and dated by the Receiver on or after the date on which the Entry is presented to the Receiver (either by posting to the account or by notice of a pending transaction), even if the debit has not yet been posted to the account.
  • RDFI Must Promptly Return Unauthorized Debit: require that when returning a consumer debit as unauthorized in the extended return timeframe, the RDFI must do so by the opening of the sixth Banking Day following the completion of its review of the consumer’s signed WSUD.

 

These rules represent a significant step forward in enhancing fraud prevention measures within the realm of credit-push payments. Attached are the press releases for 2024 new rules change from NACHA.

 

If there is anything we can do to help regarding these updates, please feel free to let your HJS advisor know.