Stop Payment for business not the same as consumer

Stop Payment for business not the same as consumer

I took an ACH Rule question phone call yesterday from one of our small financial institutions. Our member had the following quandary and wondered if we had any recommendations. Here's how it went down...

We'll call the member Joe. Joe has an account holder (Jane) who does business in the summer months selling fruits and vegetables. Her account is titled as a business. Jane uses VISA merchant services to collect from her road side customers and is debited monthly for the use of the VISA equipment. However, long after her veggie stand was closed, she continued to receive debits to her account for the equipment rental. Naturally, she called Joe when she noticed the unauthorized activity.

Joe's financial institution doesn't offer online banking services, so aside from her monthly statement, Jane has no other way to view her account activity, unless she wants to call the bank every day. Since these were CCD ACH transactions, her window of opportunity to return them as R29 (Corporate Customer Advises Not Authorized) is two days. How can Joe help Jane protect her account? Here are a few recommendations.

1. With Jane's direction, Joe could place a Stop Payment on that particular company. However, since it is a business account, the Stop Payment will have to be placed every six months (in writing). The new Stop Payment rule update - in regards to Regulation E - applies to consumer payments only. For more information on the Stop Payment rules revision, see the ACH Rule Book, page R6.

2. Jane could close her account and open a new one, but that would be very time consuming and cumbersome for her.

3. Joe could call the ODFI and explain that these transactions were not authorized. If they continue to send debits even after an R29 is sent, Joe could file a Rules Violation against the ODFI. Perhaps a fine would get their attention.

4. Joe could investigate some Debit Blocking software and block these transactions on Jane's behalf.

Please add to the conversation if you can think of more options for Joe.

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