My bank is exploring opening checking accounts online. Most consumers will fund these accounts through an ACH debit from accounts at other banks, meaning my bank will “pull” funds from another account. Because electronic transfers normally receive next day or same day availability under Regulation CC (Expedited Funds Availability Act) and Nacha rules, the bank is concerned about fraud if the transfer of money into the new account is not authorized by the accountholder.
Q Short of not opening accounts online, how can the bank protect itself against fraud if it must make these funds available before it can learn that the funds transfer is not authorized?
A In fact, ACH debits, which consumers will use to fund the account, are not subject to Regulation CC or Nacha rule holds.
Regulation CC‘s §229.10, requires next day availability (or sooner, if required by rule or contract) for “electronic payments.” While the definition of “electronic payment” includes ACH credit transfers, it excludes ACH debit transfers, as Comment 2 to §229.2(p) explains:
ACH debit transfers, even though they may be transmitted electronically, are not defined as electronic payments because the receiver of an ACH debit transfer has the right to return the transfer, which would reverse the credit given to the originator. Thus, ACH debit transfers are more like checks than wire transfers.
A new account funded by an account-opening bank “pulling” from another account, rather than “pushing” funds to an account, is an ACH debit not an ACH credit—even if it may appear to be a credit on the customer’s statement, which is simply an internal credit entry that balances the outgoing debit entry.
In addition, Nacha staff experts have confirmed that the receiving bank (the bank opening the account) has no funds availability obligations under Nacha rules.
Banks opening accounts funded through ACH debits should act in accordance with good risk management practices, their customer account agreement, and any applicable state law regarding holds. In determining when to make funds from ACH debits available, banks should consider the risk and timing of an ACH debit being returned due to lack of authorization, insufficient funds, and no account found.
For more information, contact ABA’s Leslie Callaway.
Please note that this section is not a substitute for professional legal advice.
