The
Collection of NSF Fees
Require Written Authorization
Over the last
several years, I have spoken with several of our software users
concerning the legality of processing NSF fees without "written
authorization". Some feel that Regulation
E gives the right to electronically collect an NSF fee, simply
because you have your intentions posted at the point of
sale. Note: NACHA rules specify that fees must be authorized
in writing. (Page OG160, ACH rules 2003)
Whether you like
their view or not, they make the rules and if you aren't going to
follow the rules, your transactions can not be processed. One
of our users put it like this:
"It is true
that NACHA owns the ball park and they can ban you from playing
ball in their park. So while you might be “legal” under
Regulation E, it doesn’t do much good if you are not allowed to
play, huh?"
NACHA is serious
about this. If you process unauthorized transactions and
are caught, they will simply tell the ODFI to ban you from the ACH
network. Currently, I don't know of an official "Black
List," not one that is being acknowledged anyway. But I
can guarantee you that if NACHA recom mends that your company be banned
from processing, all of the key players will be aware of
it.
If you are a user of
our Check Chase software, you have a several
options
when
processing for NSF fees.
-
If possible, put
a global authorization in place. (Call us for help if
you don't understand "Global Authorization.")
-
Stamp the back of each check and have the
checkwriter sign it. This allows for a legal pro cessing
of both the face value and the associated NSF fees through the
ACH Network.
If getting "written
authorization" is not feasible or possible, check with
your attorney about the use of paper drafts as an option for the collection of NSF
fees. (Read
Green Sheet Article regarding Paper Drafts) While not the
preferred method of recovery, it is certainly better than
being fined and possibly black listed.
I would prefer that
NACHA change the "written authorization" requirement, as
I'm sure all of you would.
But until they do, you will have
to obtain proper authorization as described by the NACHA
rules, or
collect the fees through other
processes.
There is NO middle
ground here. We process transactions through numerous
ODFI's, all of which have made it very clear that anyone found to
be processing unauthorized transactions will have their processing
privileges terminated.
Please don't put
yourself (and us) in line for a rules violation and
possible termination of your
processing privileges. If you have a
problem merchant and need help setting his account up for paper
drafts, please contact software support for
instructions.
We will continue to
push for a rules change and we encourage you to participate in our
efforts, but until NACHA changes the playing field, paper drafts appear
to be the best alternative available.
Best Regards,
-
- Jim Eliason
- President and CEO
- Check Assist
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