EFT reversals and ACH fraud
Many Thanks to Bob Leahy at [email protected] for allowing us to pirate and paraphrase his questions and answers on EFT reversals and ACH fraud. A client called him with a question. “We inadvertently sent an EFT payment to the wrong vendor and have been unable to retrieve the funds from the vendor. Do we have any recourse from the banking system?”
The NACHA (National Automated Clearing House Association) will allow the recall of a file. A file is not an individual transaction but the whole group of transition initialed at the same time. However, if the EFT was the only transaction initialed at that time you can reverse that transaction through an EFT Debit. To do this you must request a reversal from the receiving bank. The receiving bank will request permission from the account holder whose account the funds went into. If the consent is granted, the EFT reversal will be granted and the receiving bank will return the funds. If the receiving account holder refuses permission you get to go to court.
Another question came from a reader on how to prevent fraudulent check and ACH transaction hitting their accounts. The answer is that you cannot prevent them from hitting your accounts. You can, however, prevent those accounts from paying out. What needs to be done is for you to set up an account that is for deposits only. All of the credit cards, cash, checks, ACH, et cetera, all go into that account. That account is a check- and ACH-blocked account. The funds are then transferred into other accounts used for payments, purchasing, payroll, et cetera. On those other accounts you use positive pay to monitor the activity and stop unauthorized debits.
If you are large enough, you can use one account and negotiate with the bank to see if you can add some MICR lines at the bottom of the check. Those MICR lines will contain coding that automatically assigns that amount to a cost account. But you need to be big company or have a really accommodating bank if you are smaller.