The ODFI has 10 days to respond to NACHA in which they provide the actual return rate for unauthorized TEL entries for that Originator. If the actual return rate for unauthorized TEL entries exceeds 2.5%, the ODFI provides the name, address, telephone number, contact person, principal owner(s), tax identification, and if applicable, each TPSP action on behalf of this Originator with respect to TEL entries; a general description of the nature of the business of the Originator; and an explanation of the Originator’s reason(s) for the excessive return rate.
If the ODFI finds the actual return rate is fewer than 2.5%, NACHA will retain the documentation and no further contact is necessary concerning this Originator unless the Originator continues to show a risk indication. The ODFI should know that if it fails to respond to this letter within the timeframe allowed, a second letter is then issued to the COO or CFO of the ODFI to inform them that failure to provide the requested information will be considered willful disregard and will be presented to the Rules Enforcement Panel via the National System of Fines.
With the escalation of unauthorized TEL transactions in the ACH Network, NACHA began to take steps to proactively monitor TEL activity. In the 1st Quarter of 2001, the ACH Quality Task Force worked with the ACH Operators who agreed to provide statistics by return code/SEC code.
In addition, calls from regulators, enforcement agencies, Static Website Design financial institutions and others proved that there was a problem with unauthorized TEL and potential problems with WEB. In the future, NACHA, within the Rules Making Process, will research the feasibility of incorporating similar Rules amendments for all SEC Codes. A Rules Work Group is currently studying the expansion of this requirement to additional, if not all, SEC Codes.
This Guide has been published to provide a thorough understanding of how the ACH Network functions with regard to Telephone-Initiated Debit Entries. As volume continued to grow in the ACH Network, NACHA received numerous requests to consider broader options for covering consumer authorization for single-entry ACH debit transactions. NACHA developed a pilot to allow consumers to authorize single-entry ACH debits via the telephone.