21 Billion ACH Transactions: Yep, Something s Going to Go Wrong!!! WACHA Conference 2014 Kimberly W. Rector, AAP MACHA

Transcription

1 21 Billion ACH Transactions: Yep, Something s Going to Go Wrong!!! WACHA Conference 2014 Kimberly W. Rector, AAP MACHA

2 My Sideways Mind!!!! 1983 = 69% of 17 year olds had drivers licenses 2008 = 50% of 17 year olds had drivers licenses It is possible that the availability of virtual contact through electronic means reduces the need for actual contact amount young people, said Michael Sivak, research professor at the U-M Transportation Research Institute. Furthermore, some young people feel that driving interferes with texting and other electronic communication. Internet of Things = connected devices that collect and share information over the Internet (Source: ISACA) By 2020 = 50 billion objects will be connected to the Internet (Source: Cisco) 2

3 Legal Whatever The views and opinions expressed in this presentation are those of the presenter (and it is possible not even the views of the presenter) and do not necessarily represent the views of WACHA, MACHA, or NACHA (or any other ACHA ). The content of this presentation should not be construed as regulatory or legal guidance. 3

4 Were You Here Last Year? We Talked About the Cost of Exceptions Do you remember what I asked you Gonna Do It Again!!!!! If we did not talk about Exceptions What would we talk about Think about that question!!! Using examples to get you - Agenda Thinking Questioning Doing 4

5 < Balance > The Great Operations/Retail Debate We have always done it that way because of our processing system or just because Challenge you to change just one practice It is all about the account holder we don t want to make them cry/yell/complain Fixing both of these positions achieves your balance 5

6 First Thing to Go Wrong Well maybe not but I always use this first It Does Not Post!!!!! And What Do You Do Return All You Can!!!! Maybe only Debits Research Credits (crying account holder) If it rejected because of NAME Give this up!!!!!!!!! Why else did it Reject? 6

7 IRS Refund Silly Season Currently under ACH Rules IRS has no special status nor any other Originator Not required to check name on Direct Deposit Don t!!! Discovery of Mis-directed payments Simple Funds available Return R03 Funds Not Not Your YA YA Misuse of Account multiple entries Account Relationship Issue!!!!!!! 7

8 IAT Automation Issue As much as this pains Me! Some of you are checking more IATs than Wire Transfers and manually!!!!!!! 2 Things You really need to automate the manual Social Security Direct Deposits??????? FYI Standard Country Codes March 2014 ISO alpha-2 code list _codes/country_names_and_code_elements_ txt.htm 8

9 NOC s (No-one Cares?) Everyone Groans! Related to your Manual Posting Decision to Generate is Yours (RDFIs) Most Definitely for Recurring Transactions Do you issue repeated NOCs for same entry But Why for One Time ACH New Rule no requirement to change by Originator ODFIs Automate Delivery to Originator Do They Understand 9

10 Company Id Numbers Can Change At Any Time Any processing based on this data has the potential to blow up!!!!!! Account Number Swaps Distributions/Allocation Switch to Intra-system Date Triggered SSA uses 10 different IDs DNE s if you use the Company Id to intercept SSA pmts for deceased Could be a problem Stop Payment/Disputes Same issue 10

11 A2A / P2P Lot s of Calls Lately What s the Difference Do You Offer How, if it is manual need to re-think!!! Online Banking Service Provider Offerings Vendor solutions I bet if it is manual you need to think about fraud Limits, frequency, access credentials compromised Credit out wrong account Debit in 60 day return 11

12 Repeats Stops/Dispute Streamline the Stop/Dispute process No need to hear the evil Let them lie within the box Stops Intent one or cancel (this is not forever) Consumer Disputes Reg E Issue WSUD, Credit, Return, Report Pay Day Lending Relationship issue Privilege not Right 12

13 ODFIs Here Today Yep this Happens!!! Duplicate File or even worse Fraudulent File or Erroneous File You need to know this now! Can You and Will you create a Reversal File Written Requests to RDFIs They can and will tell you to GO AWAY No standard Letter of Indemnity Who made the error Originator/ODFI Review Your Controls Now 13

14 Returns ODFIs Here Today Electronic Delivery to Originators Education about what they can do Reminder ODFI warranty September 2014 Proof of authorization for Corporate Entries CCD/CTX Simplify your response to RDFI Just provide the contact info for the Originator 14

15 ODFIs Risk & Automation Authentication of Files Schedule, access, dollars, etc Out of Band Authentication I love being back in style Call backs, file totals, anything that does not involve the Internet Commercially Reasonable Security Procedures What is everyone doing Originator agrees Layers of Security Climbing a Ladder or a Mountain Education of your Originators 15

16 Read These Rulings June of 2011 the courts ruled in favor of a company Experi-Metal vs Comerica Over $500,000 unauthorized transfers, foreign Wire Transfers Company logon credentials compromised Judge Bank should have done a better job of detecting and preventing July 2012 the federal court overturns district court ruling PATCO vs Ocean Bank Now in favor of company Over $500,000 in ACH Entries - 6 days in row March 2013 decision appealed Choice Title vs BancorpSouth In favor of the bank June 2013 Company appealing court ruling Argument dual control was not commercially reasonable Company offered dual control for wires - refused 16

17 Audience Examples (Or maybe you just want to get to lunch) 17

18 Mobile Parting Thought EMV If payments were easy, everybody would be doing it. And while it may seem that everybody is getting into payments these days, those who ve been at it a while know it s not easy John Stewart & Jim Daly Digital Transactions, Nov 2013 Bitcoin Evolving Technology 18

19 Intellectual Capital Galore!!!! Your Local Regional Payment Association WACHA The Premier Payments Resource

20 My Sample Letter Sample Letter of Indemnity Date Name Organization Address City State Zip Dear ODFI Name is the originating financial institution of an ACH entry that was sent to RDFI Name in error. We are requesting that RDFI Name return the erroneous ACH entry under the NACHA Operating Rules section (2013 NACHA Operating Rules). ODFI Name requests that the incorrect ACH entry be returned through the ACH using ACH Return Reason Code R06. Detail information about the incorrect entry as it appears in the ACH transaction: Settlement Date: Originator Name: ODFI Routing Number: Receiver Name: Receiver Account Number: Dollar Amount: Trace Number: Transaction Code: ODFI Name agrees to indemnify RDFI Name from and against any and all claims, demands, losses, liabilities and expenses, including attorneys fees and costs, resulting directly or indirectly from compliance with this request. If you have additional questions about this request, please contact me at: Contact Information Sincerely, Closing Information 20