NACHA has approved an amendment to the NACHA Operating Rules and Guidelines on Differentiating Unauthorized Return Reasons (“Rule”). Currently, return reason code R10 – “Customer Advises Unauthorized, Improper, Ineligible, or Part of an Incomplete Transaction” – is all-inclusive for several return reasons. With the new amendment, return reason code R11 – “Customer Advises Entry Not In Accordance with the Terms of the Authorization” – will be repurposed to be used for the return of a debit entry that is in error but for which there is an authorization. Return reason code R10 will continue to be used when “Customer Advises Originator is Not Known to Receiver and/or Is Not Authorized by Receiver to Debit Receiver’s Account.”
The difference between these two return reason codes is that the Originator is permitted to correct the underlying error for a R11 return and, if possible, may submit a new entry without obtaining a new authorization, subject to noted “uncorrectable errors.” R11 will be considered an “unauthorized” return reason code, in which case (1) it will have an extended return timeframe; (2) a Written Statement of Unauthorized Debits must be obtained; (3) it will be included in the calculation for the Unauthorized Entry Return Rate; and (4) it will be covered by the existing Unauthorized Entry fee.
Financial institutions are required to use R11 return reason code beginning April 1, 2020, and the repurposed code will be covered by the Unauthorized Entry Fee beginning April 1, 2021.