WesPay AAP Exam
Preparation Series
Supplement to
The AAP Preparation Series Webinars
Practice Exams and Study Tips
Please note, these quizzes are compiled from multiple sources, while we have made
every attempt to ensure their accuracy if you notice an error please do not hesitate to
give us a call. Answers for each of these quizzes will be provided in a few weeks.
Chuck Floyd 415-384-4212
Jim Petkovits 415-373-1192
Patty Presta 415-373-1195
2015 Edition
SUGGESTIONS FOR TAKING THE TEST
Do Map Out a Study Plan –
Your preparation efforts should be similar to getting ready for a big presentation. Take the number of
weeks between now and October 12, 2015 and develop a plan of study for each section of the exam.
Do Focus Your Study Efforts on What You Need to Learn, Not on What You Already Know –
This is just common sense. You already have a certain level of expertise in ACH; spend your study
time focusing on areas where you have little or no expertise.
Do Practice the Skill of Test-Taking –
You have probably not taken a multiple-choice exam in a few years. You need to prepare yourself for
the effort of managing your time during the exam. The AAP exam consists of 120 questions and three
hours is allowed for completion of the exam.
Do Remain Calm –
Tension and stress are your worst enemies. Concentrate on breathing deeply and thinking positive
thoughts. Put the test into perspective. This is an opportunity to prove to yourself that you are indeed
experienced in ACH; it is not an evaluation of your self worth.
Do Read Carefully—
Be very careful in reading and interpreting the questions. Reread several times if necessary. Not
reading carefully enough is the single greatest cause of incorrect test answers. Look at key words such
as never, always, must, should, may and if.
Don’t Assume –
Carefully read all four answers, don’t just choose the first one that sounds correct. Ascertain whether
the question addresses a debit or credit, corporate or consumer, commercial or government
transaction, and understand to which participant the question pertains.
Don’t Rush –
Your only objective is to pass the test. NO CREDIT WILL BE GIVEN FOR FINISHING
EARLY!
Don’t Jump at an Answer –
Tests are often constructed to have an answer that sounds correct or close but is not the BEST
POSSIBLE answer. If you cannot remember the answer to a question, skip it and go on to the next
questions. Spending too much time on one question steals time from other questions and damages
your confidence.
Do answer the question according to the rules, not what you do in your office –
If you answer the exam question according to your systems or practical application, there is a chance
you will answer the question incorrectly.
RELAX!!
Preparing for the AAP Exam
Every test is a reading test
Before answering a question, ask yourself the following:
Does the question regard…
A debit or credit?
A consumer or corporate transaction?
A federal government or commercial transaction?
Which participant is referenced?
Don’t memorize, personalize
You could make flashcards with terms, time frames, etc. Relate regulations to something you will
remember;
Regulation E is E for Electronic transactions
Regulation D is D for Deposit accounts
UCC 4A = Use Corporate Credits 4 ACH, etc.
Don’t accumulate, eliminate
Try not to memorize lists of data. Understand the purpose of each type of ACH transaction. As an
exercise create a company that uses ACH transactions and develop a plan for the company to collect
payments using ARC, BOC, RCK, POP, WEB and TEL. How will you obtain authorizations, handle
returns and NOCs? What agreements and arrangements do you need to have with your ODFI? This
will help you apply the rules you learn about each transaction.
Every question stands by itself
Don’t make assumptions about what you think the question really means. Just answer the question as
it is asked. Don’t relate it to a previous question.
Context is the key to content
Take time to understand the intent of the question. Is it asking about liability or time frames? Which
participant is involved? Is the transaction moving forward, or being returned? If you confuse the
participant and responsibilities, you can easily answer the question incorrectly.
Be a test maker, not just a test taker
The questions in the AAP exam are all multiple choice. As you study a topic, write questions about
what you read, in anticipation of the type of question you may be asked. Form a study group and
write sample questions for each other.
Relieving Test Anxiety
Before the Test
Be prepared.
Get some exercise.
Get a good night’s sleep before the exam.
Be confident!
Don’t go on an empty stomach; eat a nourishing breakfast.
Allow yourself plenty of time.
Relax before the exam.
Don’t try to do a last minute review.
During the Test
Read the directions carefully.
Budget your time.
Change positions.
If you go blank, skip the question and go on.
Don’t panic!
Tips for Taking a Multiple Choice Test
Read each question with the intention of answering the question without the alternatives
which follow.
Use the process of elimination when you do not know the answer for sure.
When numbers are in each alternative, choose the numbers that are in the middle range,
not the extremes.
Choose answers that are longer and more descriptive
When two very similar answers appear, it is likely that one of them is the correct choice.
Watch out for negative words in the instructions or in the main question.
 Take a negatively worded question and turn it into a T/F or Y/N question as you
review each answer.
Memory Principles
Techniques to make studying less stressful.
Tip 1 - Interest
What are some ways you can create interest in a topic?
Find a study partner (contact NACHA to request an AAP Buddy).
Do some practice or research – we tend to be uninterested in things we are not good at.
Teach an assignment to someone else.
Seek a way to make the information personal.
Find a way to make it kinesthetic.
Tip 2 - Intent to Remember
Pretend there’s a quiz when you finish studying and you will get $10 for every answer you
get correct!
Use a concentration check sheet or a rubber band.
When reading something talk back to the writer.
Tip 3 - Basic Background
Before you read an assignment, preview it.
Do all practice assignments when you study.
Begin with the basics.
Do extra research..
Tip 4 - Selectivity
Look for clues when reading material on the subject.
Make yourself the test maker.
Use flashcards.
Tip 5 - Meaningful Organization
Search the information for something that is personally meaningful to you.
Alphabetize the list.
Use mnemonics.
Limit the number of items in categories.
Tip 6 - Recitation
Make use of flashcards.
Recite after reading.
Use a partner.
Tip 7 - Mental Visualization
Can it be drawn?
Can I make a mental video?
Do I know what each item looks like?
Can I convert it to a chart or graph?
Tip 8 - Association
Is this something I already know?
Is the number similar?
Is the sound similar?
Can I use it for something similar?
If I were filing it in my brain “filing cabinet”, is there an existing file I can use?
Tip 9 - Consolidation
Take notes
Ask questions
Write questions
Visualize
Recite
Make flashcards
Design practice tests
Tip 10 - Distributed Practice
Take 10 minute breaks after each hour of study.
Have a scheduled time to study.
Make use of daylight hours and time you normally waste.
Use flashcards.
Mark sections you’ve read with a question or label.
Payment Systems Overview
(Based on ACH Primer and General Payments Overview Modules)
Fill in the blanks. (Answers may contain one or more words.)
1. The ____________________ is a processing and delivery system that provides for the distribution
and settlement of electronic credits and debits among financial institutions.
2. The ACH movement began in the early ____________________ when a group of California bankers
formed the Special Committee on Paperless Entries (SCOPE).
3.
In 1974, __________________was formed to coordinate the ACH movement nationwide.
4. The main benefits associated with the use of the ACH network are __________________________
and improved productivity over paper check transactions.
5. ACH Operators may be private companies or the Federal Reserve Bank. The current private sector
operator is the _________________________________________________.
6. ________________________________________________________ provide management,
education, assistance, and services to link all types of financial institutions (commercial banks, savings
banks and credit unions) across the United States.
7. The ACH system is a __________________________________, store-and-forward system.
Transactions received by the financial institution during the day are stored and processed later in a
batch mode.
8. The ____________________________ is the entity that agrees to initiate ACH Entries into the
payment system according to an arrangement with a Receiver.
9. An ________________________________________________________ is the central clearing
facility operated by a private organization or a Federal Reserve Bank (FRB) on behalf of DFIs to or
from which participating DFIs transmit or receive ACH Entries.
10. The ___________________________________________________________________ is the
institution that receives payment instructions from the
____________________________________and forwards Entries to the ACH Operator.
11. A ______________________ is a natural person or an organization that has authorized an
Originator to initiate an ACH Entry to its account with the RDFI. A
______________________________ can either be a company or a consumer, depending on the
type of transaction.
12. Unlike a check, which is always a debit instrument, an ACH Entry may be either a
________________________ or a ____________________________ Entry.
13. Dividends, payrolls and government vendor payments are examples of ACH __________.
14. Before any transaction is initiated, the Originator and ODFI execute an
_____________________________ to use the ACH network to originate payments.
15. The ______________________________ should bind the originating company to the __________________________________________________, define the parameters of the
relationship between the two parties, identify processing requirements for the specific application(s),
and establish liability and accountability for procedures related to certain application(s).
16. The __________________ is one of the world’s oldest forms of payment, and today exists as one of
the most common methods of payment, both in the United States and internationally.
17. The traditional Check is a ____________________ payment instrument that is widely accepted and
used by businesses, governments, and consumers as payment for virtually a form of commerce.
18. A distinguishing characteristic of Fedwire is that it is a real-time, gross-settlement system which
operates in a real-time environment if it processes each transaction as it is initiated, rather than
_______________________ by __________________________.
19. The Fedwire Securities are held and transferred in _________________________ form known as
Book-Entry Securities; unlike the Fedwire Funds Service, the Fedwire Securities Service is a
___________________________________ system with regard to payments.
20. The Fedwire Funds Service is a _______________________system in which only the Originator’s
financial institution can remove funds from its Federal Reserve account.
21. _________________________________________ are not true payment instruments because they
do not result in a direct transfer of funds from the Payor to the Payee.
22. _____________________________________________ are used by consumers at ATMs to
withdraw cash from their accounts and may be used as a means of electronic payment, either on-line
or off-line, for goods or services purchased at a retail establishment.
23. Unlike a ____________________________ card, where the cost of goods is charged to an account
that is paid later and to which interest may be applied, the cost of goods charged against a
_____________________ card is taken directly from a demand deposit account.
24. The two banking conventions that advanced paper check processing were ______ and ______.
25. The check system participant known as the Payee’s Depository Financial Institution is also known as
the _________.
26. A check participant who creates an image of the original check is known as the
_________________________.
27. When a check is sent to another depository institution for collection, it is called a _____ check.
28. What type of card is similar to a debit card but the balance is not associated with a DDA or other
financial institution account? ______________
29. The use of a ___________ debit card results in immediate funds transfer.
30. Each transfer of funds on this payment system is considered irrevocable: __________.
Standard Entry Class Code Worksheet
Part I – SEC Characteristics
In Column II write the correct Standard Entry Class Code for the transactions listed below. In Column III,
indicate what type of transaction is being originated – Consumer, Corporate, Government, or ACH Operator.
In Column IV, indicate whether the transaction is a Debit or Credit and whether it is Monetary ($) or NonMonetary (0) transaction.
Column I
Transaction
ACH Payment Acknowledgement
Automated Accounting Advice
Accounts Receivable Entry
Financial EDI Acknowledgment
Back Office Conversion
Corporate Credit or Debit
Customer Initiated Entry
Notification of Change/Refused
NOC
Corporate Trade Exchange
Death Notification Entry
Automated Enrollment Entry
International ACH Transaction
Machine Transfer Entry
Point-of-Purchase Entry
Point of Sale Entry
Prearranged Payment and Deposit
Entry
Re-presented Check Entry
Shared Network Transaction
Telephone-Initiated Entry
Check Truncation Entry
Check Truncation Entries
Exchange
Internet-Initiated/Mobile Entries
Destroyed Check Entry
Column II
SEC Code
Column III
Consumer,
Corp., Gov’t,
Operator
Column IV
Monetary -$
Non-Monetary - 0
Dr/Cr
Part II – Addenda Requirements
In Column II, list whether the transaction contains an addenda record by noting if the addenda record is
Optional (O) or Mandatory (M) or n/a for none. In Column III, indicate how many addenda records the
transaction can contain: one (1), up to 9,999 or n/a
Column I
Transaction
ACH Payment Acknowledgement
Automated Accounting Advice
Accounts Receivable Entry
Financial EDI Acknowledgment
Back Office Conversion
Corporate Credit or Debit
Customer Initiated Entry
Notification of Change/Refused
NOC
Corporate Trade Exchange
Death Notification Entry
Automated Enrollment Entry
International ACH Transaction
Machine Transfer Entry
Point-of-Purchase Entry
Point of Sale Entry
Prearranged Payment and Deposit
Entry
Re-presented Check Entry
Shared Network Transaction
Telephone-Initiated Entry
Check Truncation Entry
Check Truncation Entries
Exchange
Internet-Initiated/Mobile Entries
Destroyed Check Entry
Column II
Optional (O)
Mandatory - (M)
n/a
Column III
One – (1)
Up to 9,999
n/a
ACH TIMEFRAMES WORKSHEET
Directions: Indicate the appropriate timeframe for each event listed below. When selecting either Banking
Days or calendar days, please remember that Banking Days are defined as days on which the ACH Operator
is open for business and settlement takes place. Calendar days are defined as days on which settlement may or
may not occur and Participating DFIs may or may not be open for business.
EXCEPTION TIME FRAMES
1. Time Frame for a Standard Return (i.e. NSF, closed account, etc.)
____Banking Days
2. Dishonor a Return
____Banking Days
3. Contest or Correct a Dishonored Return
____Banking Days
4. Originate an NOC from Settlement Date of Original Entry
____Banking Days
5. Response to a Refused NOC
____Banking Days
6. Originate a commercial Reclamation from Date of Death Notification
____Banking Days
7. Originate a File or Single Entry Reversal following the Settlement
Date of the Transaction(s)
____Banking Days
8. Return of an XCK Entry
____calendar days
9. Return of a Revoked or Unauthorized Consumer Transaction
____calendar days
10. Return of an Unauthorized CCD or CTX to a Corporate Account
____Banking Days
11. Refuse a Notification of Change
____calendar days
12. Originators must make changes specified in an NOC related to a recurring Entry within _____ of
receipt of NOC or prior to initiating another Entry to the Receiver’s account,
whichever is later.
____ Banking Days
COMPLIANCE TIMEFRAMES
1. Send Report of Possible Rules Violation from Date of Occurrence to NACHA
____calendar days
2. Notification to Receiver of Change in Amount of Debit
____calendar days
3. Send Copy of Item (relating to RCK) to RDFI upon request
____Banking Days
4. Notification to Receiver of Change in Date of Debit
____calendar days
5. Make Changes Specified by the NOC related to a recurring Entry before next Transaction
____Banking Days
6. Originate First Live Dollar Entry Following Settlement Date of Prenote
____Banking Days
7. Provide NOC or Corrected NOC Information to Originator
____Banking Days
8. Retention of Copy Relating to RCK Item
____year(s)
9. Retention of All ACH Records (ODFI, RDFI)
____year(s)
10. Retain a Copy of XCK
____year(s)
11. Retention of Consumer Authorization after Termination
____year(s)
12. Retention of ACH Records (ACH Operator)
____year(s)
13. Provide a copy of a WSUD within 10 days request from an ODFI for
____year(s)
14. ODFI Reporting Requirements to NACHA’s inquiry on Originator
with excessive Unauthorized Returns
_____Banking Days
15. RDFI provides copy of Written Statement upon ODFI’s request
_____Banking Days
16. Originator may make a written demand for payment within ____ after
it receives the returned Reclamation Entry.
_____Banking Days
ACH Records Exercise
Recommended reading: Appendix Three of the NACHA Operating Rules and Appendix J Basic
ASC X12 Rules of the NACHA Operating Guidelines.
1. Name two of the fields in the Batch Header Record that may be changed to originate a File Reversal.
2. What field(s) in the Entry Detail Record must be changed to originate a File Reversal?
3. Match the following addenda types to the addenda samples
Individual Representative Payee
Death Notification Entry
EFTPS
Child Support Payments
Vendor Express
Institution Representative Payee
a. ________________________________________________________________________________
TXP*381234567*09405*970301*09405*500000****\
b. ________________________________________________________________________________
705RMT*IV*43265\DTM*003*970327\00019876547
c. ________________________________________________________________________________
DED*CS*ZC146*970115*30000*363501234*Y*SMITH,TOM*MI333\
d. ________________________________________________________________________________
DATE OF DEATH*070397*CUSTOMER SSN*394754732*AMOUNT*653.00\
e. ________________________________________________________________________________
N1*GD*CINDY THOMPSON\N1*BE*MEG PRIEUR\
f. _________________________________________________________________________________
N1*1U*SLEEPY HOLLOW HOME\N1*BE*BETTY SMITH*34*353759921\
4. In the Addenda Record, what function does the asterisk (*) have? What is it referred to in EDI terms?
5. In the Addenda Record, what function does the backslash (\) have? What is it referred to in EDI terms?
6. In an IAT transaction, which Addenda Record carries the Transaction Type Code? (i.e., PEN, POP, etc.)
7. Which Record and which Field contain the Check Serial Number and Terminal information in an IAT
Entry that came from a POP transaction?
8. Which SEC Code requires that the Addenda Records be included on a Return Entry?
9. The Addenda Indicator has a value of _____ or ____.
10. How many records are in a Block? In which record do you find the Block Count?
File Format Exercise
1. Which Record contains the file creation time and date?
2. Which Record contains the Service Class Code and what does it identify?
3. In what format is the Settlement Date?
4. Which Participant assigns the Settlement Date?
5. What is the largest dollar amount a single ACH transaction can be?
6. How many characters of payment related information are allowed for in the Addenda Record of CCD
and CTX transactions?
7. How many characters (spaces) is the Trace Number field and which Participant does it identify?
8. What fields, if contained in the POS Addenda Record, are the RDFI required to pass to the Receiver?
______________ ____________ ______________ ______________
9. How many characters are contained in each ACH File Record?
10. Explain the difference between Addenda Record Indicator and Addenda Type Code.
11. Which Record contains the Company Name, Company ID, Standard Entry Class Code and Effective
Entry Date?
12. What is the Entry Hash and in which Record(s) is it contained?
13. If a batch contains 50 credit transactions, 25 debit transactions, and 25 Addenda Records, what will be the
Entry/Addenda Count? ____________________________________________
14. In what file record will it be found? ____________________________________________
15. In an IAT transaction, what is the maximum number of Addenda Records used for Remittance?
16. In an IAT transaction, what is the maximum number of Addenda Records used for Foreign
Correspondent Bank information?
17. When an IAT transaction has both Remittance information and Foreign Correspondent Bank
information, what is the maximum number of Addend Records to be used for each?
18. In what record of an IAT Entry are the OFAC Screening Indicators found? What are they?
19. What is the purpose of the Originator Status Code? In what ACH Record is it found?
20. Which SEC Code requires a unique Batch Header Record?
IAT Exercise
True or False
1._________ A Gateway means either an ACH Operator or a Participating Depository Financial Institution
that acts as an Entry Point to or Exit Point from the U.S. for payment transactions.
2.__________ An ACH Operator acting as a Gateway will accept Inbound IAT Entries that are ACH credits
or debits.
3.__________ A Correspondent Bank is a Gateway that acts as an Entry Point to or Exit Point from a foreign
country.
4. _________ A maximum of twelve Addenda Records may be transmitted with an IAT Entry.
5. _________ When sending an NOC in relation to an IAT Entry, the seven Mandatory Addenda Records
will not be needed to process the NOC and will not be included.
6. _________ The OFAC Screening Indicators in the IAT format are two optional, single-character fields,
found in the First IAT Addenda Record.
7._________ The Transaction Type Code is found in the IAT Entry Detail Record.
8. _________ The use of Return Reason Codes R80-84 are restricted to Gateway use only.
9. _________ The Country Code as approved by the International Organization for Standardization (ISO) is a
four-digit code.
10. ________ U.S. Military Bases and Embassies, regardless of their location, are considered under U.S.
jurisdiction, so the transactions are considered international.
11. _________ A Gateway that discovers an OFAC hit in an IAT debit must identify the Entry as suspect and
forward it to the RDFI immediately.
12.__________ The IAT SEC Code may be used for ACH transactions to consumer or corporate accounts.
13. _________ The OFAC Screening Indicator Field provides the RDFI with the final determining factor
regarding OFAC compliance.
14. _________ A DFI is excused from its compliance with specific obligations under the NACHA Operating
Rules only when the processing of an IAT Entry would cause the DFI to be in violation of U.S. law.
15._______ A “blocked party” on the OFAC list means that countries outside of the U.S. territories have
blocked these Entries.
Name the Governing Body, Regulation or Law
Instructions – please fill in the blank with the appropriate answer.
1
Administers economic sanctions and embargo programs that
require assets and transactions involving interest of targeted
parties be blocked or frozen.
2
Governs Federal payments made through the ACH Network.
3
Establishes the procedures for the interbank system of collecting
checks and wire transfers and related provisions for settling
balances, and transferring funds in the Federal Reserve System.
4
Governs the clearing and settlement of commercial ACH
transactions by the Federal Reserve Banks, ODFIs and RDFIs.
5
Governs the basic rights and obligation of consumers and
financial institutions for the usage of electronic funds transfer
services.
6
Applies only to Government securities issued by the Bureau of
Public Debt and made through the ACH Network. These
securities include Treasury bills, notes, and bonds, Government
savings bonds and any other debt instrument issued by the Bureau
of Public Debt.
Specifies the requirements associated with reserves that depository
institutions must maintain at Federal Reserve Banks. It further
differentiates between “Transaction Accounts” and financial
institutions must ensure that no more than the permitted
withdrawals or transfers are made for a specific type of time
deposit account.
A comprehensive body of law for wholesale electronic funds
transfers. It details the rights and obligations of RDFIs, ODFIs,
Originators and Receivers.
7
8
9
10
A banking circular issued to address large-dollar payment system
risks. It outlines the policies, procedures, and controls that
national banks must have in place for assessing risk associated
with various payment systems in which the bank participates.
Provides rules for financial institutions that use EFT mechanisms
to process Federal Tax payments through the Electronic Federal
Tax Payment System (EFTPS). Financial institutions become
legally bound to the regulation when they assist in completing
Enrollment Form 9779 or initiate or receive a Prenote or live
dollar tax payment.
Resource: ACH Compliance Manual
THE REG E DIRTY DOZEN: TRUE OR FALSE
Read the statements and place a T or F next to each
Regulation E can be found at: www.consumerfinance.gov/eregulations
1
_______ Reg E classifies both failure to include a transfer on the periodic statement and a consumer
request for more information to investigate a potential error as "errors".
2
_______ A DFI must respond to a notice of an error by either resolving it within 10 Business Days or
provisionally recrediting the customer account during a 45-day investigation.
3
_______ Reg E allows exactly twice as long to resolve POS errors or EFTs that are not initiated within a
state as pre-authorized EFT errors.
4
_______ A DFI must provisionally re-credit a consumer account even if it required written confirmation
following oral notice of an error and the customer did not provide it.
5
_______ DFIs have two business days to correct confirmed errors.
6
_______ DFI may not notify consumers of corrected errors via the periodic statement.
7
_______ If loss/theft of access device is not reported within two Business Days, the consumer’s liability
will exceed $50 if financial institution establishes that unauthorized transactions would not have occurred
if loss/theft had been appropriately reported.
8
_______ DFI has three business days after completing its investigation to report the results to the
consumer.
9
_______ Reg E requirements for notices of varying amount and stop payment for recurring payments are
the same as NACHA requirements.
10 _______ Government-initiated transfers and passbook accounts are exempt from Reg E disclosure
requirements.
11 _______ If an FI is small (asset size of $100 million or less), debits and credits it receives are exempt
from Reg E disclosure requirements.
12 _______ Reg E covers all ACH commercial transactions.
AAP Rules Review
Instructions – please fill in the blank with the appropriate word or words.
1. The beneficiaries of the NACHA Operating Rules are _________, _________, _________, and
___________ . Section 1.9
2. Any agreement, authorization, Written Statement of Unauthorized Debit or other record that is required
to be signed or similarly authenticated may be signed with an electronic signature in conformity with the
terms of the _____________________________________. Subsection 1.4.4
3. Authorization of an ACH consumer debit Entry must be in writing and signed or
_____________________ by the Receiver. Subsection 2.3.2.2
4. The Originator must provide ________to the Receiver prior to originating an ARC Entry. Subsection
2.5.1.2
5. There are a minimum of ____ pieces of information that must be included as part of a TEL
authorization. Subsection 2.5.15.2
6. At the time an Entry is processed by an RDFI, the authorization has not been terminated, in whole or in
part, by
_____________. Subsection 2.4.1.1
7. If a personal identification number (PIN) is required, it must comply with the American National
Standards Institute’s (ANSI) Accredited Standards Committee (ASC) _______ standards. Subsection
2.5.9.2
8. Prior to the initiation of the first credit or debit Entry to a Receiver’s account with an RDFI, an
Originator may, originate a _________ _____ to the RDFI. Subsection 2.6.1
9. A Reversing File must be made available to the ACH Operator within _______ of the discovery of the
Erroneous File. Subsection 2.8.3
10. An ODFI that initiates a Reversing or Correcting File shall ___________ each participating DFI and
ACH Operator. Subsection 2.8.4
11. An Originator or ODFI must originate a Reclamation Entry or written demand for payment within
_____________ after the Originator receives notice of the death of the Receiver. Subsection 2.10.4
12. The _______ warrants that the signature is genuine on all XCK Entries. Subsection 2.5.18.5
13. An Originator must retain a copy of the front and back of the item to which the RCK Entry relates for
____ _____ from the Settlement Date of the RCK Entry. Subsection 2.5.13.5
14. The Check, relative to an initiated ARC must be delivered via _______ , ________ or
___________________________________ . Subsection 2.5.1.1
15. A copy of the source document for an ARC Entry must be kept for _____
years from the Settlement
Date of the ARC Entry. Subsection 2.5.1.5
16. The Originator of an ARC Entry must employ commercially reasonable methods to ______________
(1) The Eligible Source Document until _______________ and (2) all banking __________________
related to the ARC Entry. Subsection 2.5.1.5
17. During the initial capture of MICR information for a BOC Entry, the Originator must initially use a
___________________ to capture the Receiver’s routing number, _______________ , and Check
Serial Number from the MICR line of the Receiver’s Eligible Source Document. Subsection 2.5.2.4
18. ODFIs warrant that they have established procedures to maintain ___________________ on each
Originator of BOC Entries. This includes: company name; address; telephone number; contact person;
taxpayer identification; and description of the nature of the business. Subsection 2.5.2.5
19. Originators of BOC Entries must maintain a working __________________________. This must also
be displayed in the notice provided to the Receiver. Subsection 2.5.2.5
20. Each originator of WEB Debit Entries must have employed a commercially reasonable
______________________________
to screen each WEB Debit Entry. Subsection 2.5.17.4
21. Each Originator that originates WEB Debit Entries must verify the Receiver’s __________________
used in the WEB Debit Entry is valid. Subsection 2.5.17.4
22. Originators of POP Entries must capture from the MICR line of the Receiver’s Eligible Source
Document __________________, __________________, and ________________________.
Subsection 2.5.10.4
23. Upon written request by the National Association, to the ODFIs Chief Operating Officer regarding an
Originator’s or Third-Party Sender’s Unauthorized Return Rate, an ODFI must provide
____________________ to the National Association within _____________ specific information..
Subsection 2.17.2
24. If an Originator changes the payment date of a scheduled debit to a consumer’s account, they must
provide notice within ____________________ days of the affected Entry. Subsection 2.3.2.6
25. An Originator of BOC Entries must employ commercially reasonable methods to __________ the
identity of the Receiver. Subsection 2.5.2.5
26. Each Originator that initiates TEL Entries must employ ____________ ________________ procedures
to verify the identity of the Receiver. Subsection 2.5.15.4
27. When the RDFI requests a copy of a Receiver’s authorization in writing, the ODFI must provide it to the
RDFI within ________________ Days. Subsection 2.3.2.5
28. An RDFI may rely solely on the _________ __________ contained in an Entry for the purpose of
posting the Entry to a Receiver’s account. Subsection 3.1.2
29. A PPD credit Entry that is made available to the RDFI by 5:00pm local time on the Banking Day prior to
the Settlement Date shall be made available to the Receiver for withdrawal at the
________________________ on the Settlement Day. Subsection 3.3.1.2
30. If requested by the Receiver, the RDFI must provide all information contained in the __________
_________ Field of an Addenda Record(s), transmitted with a ______, ______, ______ or
_____________________ Entry to the Receiver by the opening of business on the second Banking
Day following the Settlement Date of the Entry. Subsection 3.1.5.3
31. Third-Party Senders must provide, upon the ODFI’s request, information related to each
_______________ for which it transmits Entries. Subsection 2.15.1
32. All Entries, except RCK, that are returned as R01 & R09 can be reinitiated no more than _____ times
after the return of the original Entry. Subsection 2.12.4
33. An RDFI may contest or correct a dishonored Return Entry as long as it is Transmitted within ___
Banking Days of the Settlement Date of the dishonored Return Entry. Subsections 3.8.5.1 & 3.8.5.2
34. Each Participating DFI must maintain, or have the use through a correspondent of, an account with a
________________. Section 7.1
35. An ODFI may, ________ or in writing, request an RDFI to return or adjust an Erroneous Entry that
was sent by the ODFI. Subsection 2.12.2
36. An RDFI must have a Written Statement of Unauthorized Debit signed by the __________ prior to
returning an ACH debit Entry as unauthorized. Subsection 3.13.2
37. An RCK Entry that has been determined to be ineligible must be returned so as to be made available to
the ODFI no later than the opening of business on the ________ ______ following the sixtieth
calendar day after Settlement. Subsection 3.13.1
38. An ACH Operator acting as a Gateway must not process _______ Inbound IAT Entries, except for
Reversing Entries. Subsection 5.1.8
39. The Gateway (Operator) will comply with all applicable U.S. Laws including requirements administered
by ______ and _________ . Subsection 5.1.2
40. An ACH Operator must total the _______ and _________ activity received from and Transmitted to
each other ACH Operator and Participating DFI during each Banking Day. Subsection 4.2.7
ACH Risk Exercise
 Credit (Exposure)
 Operating
 Fraud
 Systemic
Identify which type(s) of risk is involved in the following situations. Reference: ACH Risk
Management Handbook
1. When an Originator’s payroll was delivered to the ODFI for transmission, the ODFI employee
accidentally deleted the file.
2. An Originator sent six CCD+ payments to suppliers with a file value of $557,000. The company’s
availability on their $3 million line of credit is $300,000. Their payments on the line of credit have been
received 10-15 days late six of the past eight months.
3. An ODFI employee adds a payment to her own checking account to a company payroll she is
transmitting.
4. The computer used to transmit origination files crashes due to memory limitations and the employee in
charge of the transmission doesn’t notice that the batch wasn’t completed.
5. An ODFI transmitted tax payments for a company on Thursday. The sales officer at the ODFI learned
the next morning that the company filed for bankruptcy.
6. Both employees responsible for ACH exception processing called in sick on the same day. The task is
not completed that day as a result.
7. Your financial institution does not balance its Federal Reserve account.
8. A new rule reduced the time to send corrected returns and your financial institution is unaware of the rule
change.
9. A foreign bank, with offices in the US, closes down all operations due to economic hardship in the
country of their headquarters. Even US offices suspend operations, including ACH processing and
settlement.
10. ABC Company pays its monthly payroll of $1 million via direct deposit through Second Community
Bank. On July 28th, ABC Company sends its payroll file to Second Community Bank with an effective
date of July 30th. Second Community Bank forwards the Entries to its ACH Operator on July 28th. The
employee’s accounts are credited on July 30th. There were insufficient funds in ABC Company’s account
to cover the amount of the payroll file.
11. An RDFI posted all of its received ACH Entries based on the Effective Entry Date. A $50 million ACH
credit, originated by the Department of Defense, was received by the RDFI on Friday, October 15th. The
Effective Entry Date of the Entry was stale dated. However, due to a holiday, the Settlement Date of the
entry was Tuesday, October 19th. The RDFI posted the entry on October 15th and the receiving
company wired the funds out of the account that day. Since the RDFI did not receive a $50 million credit
in its reserve account until October 19th, the RDFI experienced a $30,000 loss of funds at the current
interest rates.
12. A programmer at an ODFI scans a file before forwarding it to the ACH Operator, and locates a large ($1
million) credit transaction destined for an RDFI, where the programmer has a checking account under a
false business name. The programmer alters the file by placing his account number in the $1 million
transaction. The next morning, the programmer drives to his bank and wires $1 million to his account in
Zurich. Later that morning, the intended Receiver realizes that the expected transaction was not posted.
The Originator requests reimbursement for $1 million from the ODFI for the payment that was
misappropriated by the programmer.
Uniform Commercial Code Article 4A Exercise
Reference: ACH Compliance Manual
1. Identify the types of ACH Entries that are subject to Article 4A.
2. When does acceptance occur for the ODFI?
3. What obligations are triggered when the ODFI accepts an Entry subject to UCC 4A?
1.
__________________________________________________________
2.
__________________________________________________________
3.
__________________________________________________________
4.
__________________________________________________________
5.
__________________________________________________________
4. Which of the above obligations may be varied by agreement?
1. _____________________________________________________________
2. _____________________________________________________________
5. What obligations under UCC 4A are superseded by the NACHA Operating Rules?
1. _____________________________________________________________
2. _____________________________________________________________
3. _____________________________________________________________
6. How does Article 4A define a ‘commercially reasonable’ security procedure?
7. What factors are used to determine ‘commercially reasonable’ security procedures?
1. _____________________________________________________
2. _____________________________________________________
3. _____________________________________________________
4. _____________________________________________________
8. How does UCC 4A define acceptance by the RDFI?
1. _________________________________________
2. _________________________________________
3. _________________________________________
Electronic Check Applications Exercise
Use the NACHA Operating Rules as a resource. Select the correct word or phrase from the list below. Some
answers might be used more than once.
POP
Terminal City & State
securely stored
notification
Accounts Receivable Entries
7 Years
electronically
$2500
Re-presented Check Entries
2 Years
destroyed
Authorization
cannot
consumer statement
U.S. mail/drop box
Receiver advises Unauthorized
REDEPCHECK
identity
Authorization Revoked
Two Banking Days
Pre-printed Serial Number
$25,000 or less
Check Serial Number
no limit
telephone number
voided
1. The Standard Entry Class Code for a Point-of-Purchase Entry is ________________.
2. The Point-of-Purchase application requires that the Receiver’s Check be
___________________________________ and returned to the Receiver at the check out.
3. Receipts issued at the check out for a Point-of-Purchase transaction must include a description of the
Entry, information about the merchant including a phone number, date and amount of the
transaction, the source document Check Serial Number and the _____________________
____________________ ________________________.
4. The dollar limit for a Point-of-Purchase Entry is $____________________________.
5. For a Point of Purchase Entry, the MICR information must be
___________________________________________________ captured by the merchant.
6. An RDFI may return a Point-of-Purchase Entry for up to 60 days from the Settlement Date for the
following reason: ______________________________ ___________________________
_______________________________________.
7. A Point-of-Purchase Entry may not be returned as _______________________________.
8. If the consumer places a stop payment on the check used for a Point-of-Purchase Entry, the RDFI
must ensure the return the Entry is received by the ODFI as R08 Payment Stopped within
_____________________ __________________________ ____________________.
9. The application used by merchants/billers to collect funds on a Check returned NSF or Uncollected
Funds is the ____________________________________________________.
10. The Company Entry Description on an RCK Entry is always _______________________.
11. The dollar limitation on RCK Entries is $_______________________________________.
12. ___________________________________ to the consumer prior to receipt of the Check is
required by any merchant/biller wishing to use the RCK application.
13. An additional collection fee _____________________ be added to the face amount of the Check.
14. The Check Serial Number is required in the RCK transaction and on the
_________________________ _____________________________.
15. The Originator must retain a copy of the front and back of the item related to an RCK Entry for
______________________ _________________________.
16. ARC is the Standard Entry Class Code for ___________________ ____________________
________________________.
17. ARC is a one-time ACH debit Entry used by an Originator to convert Checks received via
_________________ ___________________ or placed in a ______________________.
18. The Originator of an ARC Entry must retain a copy of the front of the source document for
___________________ ___________________ from the Settlement Date.
19. The source document used for obtaining information for an ARC Entry may be retained by the
Originator and must be
until destruction.
20. The provision of a notice that informs the consumer that the Originator will use the source document
to initiate an ARC Entry and the receipt of the Check by the Originator together constitutes
____________________________ of the ARC Entry.
21. Back Office Conversion allows an Originator to convert the Receiver’s source document into an
ACH debit as long as the source document contains a
22. The Originator of a BOC Entry must verify the Receiver’s
.
using commercially reasonable
procedures.
23. The Originator of a BOC Entry must establish a working
that must be
able to be answered during normal business hours. The BOC notice must also include this.
24. ODFIs must establish procedures for maintaining documentation on each Originator of a BOC
Entry. This information must be provided to the RDFI upon their written request within
of the Settlement Date of the original Entry.
25. An RDFI receiving IAT transactions that contain a Transaction Type Code of ARC, BOC or POP
must place the ________ _________ ________ of the converted Entry onto the Receiver’s
Statement.
WEB and TEL Exercises
Use the NACHA Operating Rules as a resource.
1. An Internet-Initiated Entry may be authorized for Single Entry or ___________________ Entries.
2. The Originator of a WEB Debit Entry is required to employ commercially reasonable risk
management techniques including fraudulent transaction detection systems, verification of routing
numbers, audits of website security and _____________________________.
3. The Standard Entry Class Code WEB provides all participants with the ability to readily identify these
Entries and address the unique ________________________ issues inherent in Internet/Mobile
payments.
4. The NACHA Operating Rules and ________________________ govern WEB Entries.
5. Authorization for a WEB Entry is ‘signed’ using the
_______________________________________ standards identified in the E-sign Act.
6. The indicator “R” in the __________________________________ of the Entry Detail Record
identifies a recurring WEB Entry.
7. The ODFI is no longer required to establish specific _________________________ for each of its
Originators initiating a WEB Entry.
8. A Fraudulent Transaction Detection System for a WEB Debit transaction is employed by the
Originator to _________________________________ the Receiver.
9. A Single-Entry consumer debit transaction authorized orally by a Receiver is a
________________________________.
10. The NACHA Operating Rules and __________________________ govern TEL Entries.
11. A Company may not initiate a call to a consumer and offer the payment option of a TEL Entry unless
there is an _______________________________________________ between the Originator and
the consumer.
12. The Originator of a Single-Entry TEL is required to ________________________________ the
consumer’s oral authorization or provide written notice to the Receiver confirming the oral
authorization.
13. The Originator of a TEL Entry is required to verify the __________________________ of the
Receiver and that the ____________________ provided by the Receiver is valid.
14. How often do the NACHA Operating Rules require Originators to conduct an audit of their security
practices when originating WEB debit entries?
a. Annually
b. Semi-annually
c. Only DFIs and third-party processors have audit requirements
d. Every three years
15. For recurring debits where the amount of the transactions varies, which specific requirement does
NOT apply?
a. The Originator must send the Receiver written notification.
b. Notification must include amount and date on or after which the entry will be debited.
c. The consumer cannot choose to opt out of notification for any reason.
d. The consumer must be notified ten calendar days before the entry is initiated.
16. For a TEL Entry, if the payment type code field is blank, what does this indicate? _______ .
Compensation and Arbitration Rules Indicate by “C” or “A” whether the statement pertains to
Compensation or Arbitration
1
Governs the settlement of claims between DFIs
2
Claim only processed if the amount of the damages claimed is $250 or
more.
$200 administration fee
3
4
5
In general, this should not exceed the benefit, but may include interest and
penalties as a result of an overdraft.
Governs the settlement of disputes between DFIs.
6
$250 application fee
7
There are three classifications of disputes
8
Claim shall be paid for an Entry if the loss suffered by the claimant is at
least $200 per Entry.
Arbitration Procedures
$ Damages
Arbitration A
Arbitration B
Arbitration C
$ Arbitrator stipend
# Arbitrators
Rules Enforcement
1.
What is the purpose of the ACH Fines and Enforcement?
2.
The Rules Enforcement Panel may direct an ODFI to suspend the Originator or Third-Party
Sender from originating if it has determined that there is a Class ___ Rules Violation.
3.
An ODFI that is unable to provide NACHA with a copy of a requested ACH Audit report will be
considered as a Class __ Rules Violation.
4.
After the fourth Rules Violation of failure to comply with an NOC, an ODFI is
assessed
a
$100,000 fine by NACHA for a Class 2 Rules Violation. The ODFI made every attempt to let
its
Originator know it was the Originator’s obligation to correct the payment information;
however, the
Originator continued to send the entry incorrectly. The ODFI is pursuing legal
action toward the
Originator to recoup the $100,000 fine. The dispute is interpreted according
to the provisions of
a. NACHA Operating Rules.
b. State corporate law.
c. State contract law.
d. UCC Article 4A
5.
6.
What is the maximum fine for a 3rd recurrence of a Class 1 Rules Violation?
The maximum fine for a Class 3 Rules Violation is ___________.
7.
A fourth recurrence of a rules violation is a Class ________ violation.
8.
The ____________________________may suspend an Originator if there is a Class 3
violation.
Marketing and Products Worksheet
Part I
Identify the transaction
Is it a debit, credit or both? Write a D for debit or a C for credit next to each application.
______ Social Security payment
______ Insurance payments
______ Point of Sale
______ Dividends
______ Pensions
______ Customer-initiated transactions
______ Annuities
______ Utility payments
______ Cash Concentration
______ Tax payments
______ Payrolls
______ Re-deposited Check Entry
______ Interest payments
______ Internet-Initiated/Mobile Entries
______ Point-of-Purchase
______ Telephone-Initiated Entries
______ Charitable donations
______ Government vendor payments
______ Expense reimbursement
______ Cash Disbursement
Part II
Reference for questions 1. – 2. - https://direct.nacha.org/
1. Explain the difference between Direct Deposit and Direct Payment:
2. When should financial institutions use “via ACH” on their Direct Deposit and Direct Payment
promotions?
3. List the benefits to a financial institution that offers electronic payment services to their customers.
4. What are the advantages of Direct Deposit and Direct Payment for corporations?
5. Billers offer Electronic Bill Presentment and Payment to their customers for what reasons?
Federal Government Reclamations Exercise
Reference: Green Book
1. List the situations in which a Treasury-disbursed Federal payment must be returned.





____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________

____________________________________________________________
2. What types of Federal payments are subject to Reclamation?
3. Federal agencies must initiate Reclamations within _______________________________ after the
date that the agency receives notification of death.
4. Treasury may reclaim post-death payments within ________________________________ prior to
the date of the notice of reclamation – with one exception.
5. An RDFI may limit its liability for post-death payments under what circumstances?



____________________________________________________________
____________________________________________________________
____________________________________________________________
6. RDFI liability can be limited to the amount of the account balance at the time the RDFI first received
notice of death plus the amount of all post-death benefit payments received within
____________________________________________________ following death.
7. An RDFI must return all payments received ____________________________________.
Treasury ACH Review Questions
1.
Which part of Title 31 of the Code of Federal Regulations provides the basis for most of the
information contained in the Green Book?
a. 204
b. 205
c. 210
d. 229
2.
Which of the following form numbers may be used to enroll a consumer for Direct Deposit of Social
Security benefits?
a.
FMS 150.1
b.
SF 1199A
c.
SF 3881
d.
SF 133
3.
What form does the Federaluse to enroll vendors in the FEDI program?
a.
SF 1200
b.
SF 3881
c.
FOMF
d.
FMS 2942
4.
What is the name given to the master list of financial institutions that receive Federal government
ACH payments?
a.
Routing/Transit File
b.
Customer File
c.
Central Information File
d.
Financial Organization Master File
5.
Which of the following does the Federal Government NOT use when tracing a lost Federal
government payment?
a.
Trace-Pay
b.
FMS 150.2
c.
Tele-TRACE
d.
FMS 150.1
5. Which of the following is not included in the addenda record of a Death Notification Entry (DNE)?
a.
Date of Death
b.
Social Security Number
c.
Date of Enrollment
d.
Amount of Payment
6. Which of the following Federal government payments is not subject to Reclamation?
a.
Social Security Benefit
b.
Veterans Benefit
c.
Supplemental Security Income
d.
IRS Tax Refund
7. How long does a Federal government agency have to initiate a Notice of Reclamation?
a.
5 Banking Days after the death
b.
5 Banking Days after notification of death
c.
120 days after the death
d.
120 days after receiving notification of death
8. What is the timeframe for response to a Notice of Reclamation?
a.
60 days
b.
45 days
c.
90 days
d.
120 days
9. For which of the following reasons can a Notification of Change not be done for a Federal
government benefit payment?
a.
Change a Transaction Code
b.
Change an account number
c.
Correct an account number
d.
Change name of beneficiary
10. A government agency benefit payments that is exempt from the Garnishment Rules will have
________ encoded in Positions 54 and 55 of the “Company Entry Description” Field of the Batch
Header Record.
11. A Federal Tax Refund comes into your FI and shows up on your exception list because the savings
account number is 232425 and there is no such savings account number. You should
a. Research and manually post the Entry
b. Research, manually post the Entry and send a NOC
c. Return the Entry R04
d. Look at the name on the Entry and cut them a check
12. A Federal Tax Refund comes into your FI and shows up on your exception list because the savings
account number is 232425 and there is no such savings account number. You should return the entry
_____.
a. R10
b. R07
c. R04
d. R01
Electronic Checks Reference Chart – Operations
Standard Entry Class
Code
Description of the
electronic check
transaction
What prints to the
statement?
Point-ofPurchase
Back Office Conversion
Re-presented Check
Accounts Receivable
POP
BOC
RCK
ARC
Notice provided meeting
Rules & Reg. E requirements,
check voided by merchant
and returned to check writer.
Notice provided meeting
Rules & Reg. E requirements,
check retained by merchant
and processed in back office.
NSF check or
uncollected funds represented electronically.
Descriptive word, Company
name, check number,
terminal city & state
Receiver. They received it
back at time of purchase.
Descriptive word, Company
name, check number
$25,000 or less
Consumer checks, corporate
checks that do not contain an
auxiliary on-us field in the
MICR line
First party checks only.
Company to which check was
payable.
Original – no retention, copy
for 2 years
$25,000 or less
Consumer checks, corporate
checks that do not contain an
auxiliary on-us field in the
MICR line
First party checks only.
Number of
presentments
Three presentments
Three presentments
Can a return fee be
charged?**
Yes, as a separate transaction
with authorization.
Yes, as a separate transaction
with authorization.
Authorization
requirements
Notice and signed
authorization at time of
purchase.
Notification prior to writing
check
Who retains the check?
How long is the check
retained?
Dollar limit?
Eligible Items
If account holder claims
not authorized
If account holder claims
error in transaction
(improper entry)
How much time does
account holder have to
dispute transaction? [see
NOTE]
Return Reason Codes
for:
Unauthorized
Authorization Revoked
Check and ACH
presented
Determined by Receiver.
Written Statement required
Follow error resolution
procedures.
60 day right of return from
posting date. (Reg E error
resolution also applies)
Written Statement required
Follow error resolution
procedures.
60 day right of return from
posting date. (Reg E error
resolution also applies)
REDEPCHECK,
Company name and
check number
Company to which
check was payable.
Original – no retention,
copy for 7 years.
Less than $2,500
Consumer NSF checks
First party checks only.
Once as check, twice as
ACH or twice as check,
once as ACH.
Yes, as a separate
transaction with
authorization.
Notice provided meeting Rules
& Reg. E requirements, check
mailed to biller, deposited at
drop box or in-person at bill
payment location.
Descriptive word,
Company name, name
(optional) and check number
Biller to which check was
mailed, dropped or presented.
Original – no retention, copy
for 2 years.
$25,000 or less
Consumer checks, corporate
checks that do not contain an
auxiliary on-us field in the
MICR line
First party checks only.
Three presentments
Yes, as a separate transaction
with authorization.
Notification prior to
writing check
Notification prior to writing
check
Written Statement
required
Written Statement required
Follow error resolution
procedures.
Follow error resolution
procedures.
60 days from
settlement date. (Not
Reg E)
60 day right of return from
posting date. (Reg E error
resolution also applies)
R10
Cannot revoke
R37
R10
Cannot revoke
R37
R10
Cannot revoke
R37
R51
Cannot revoke
R53
Are Stop Payments
allowed?
Yes, prior to posting of
Entry. Return R08 within 2
days.
Yes, prior to posting of
Entry. Return R08 within 2
days.
What if there is a Stop
Payment on a check and
it comes in as ACH?
Return R08. No extended
return time.
Return R38 within 60 days of
Settlement Date.
Yes, prior to posting of
Entry. Return R52
within 2 days.
Return R52 within 60
days of Settlement
Date.
Yes, prior to posting of Entry.
Return R08 within 2 days.
Return R38 within 60 days of
Settlement Date.
NOTE: The ACH payment system allows a financial institution to return a consumer debit up to 60 days
after the transaction posts, if the consumer attests it is incorrect or unauthorized. Regulation E provides the
consumer protection for electronic transactions for a period of 60 days following the date of the statement.
Refer to your Reg E error resolution procedures for POP and ARC transactions brought to your attention
after the ACH 60 day right of return, but within the Reg E 60 day from statement date period.
WEB and TEL Reference Chart – Operations
Internet-Initiated/Mobile Entry
Telephone-Initiated Entry
TEL
What prints to the
consumer’s statement?
How many transactions
does this authorize?
How long is the
authorization retained?
Dollar limit?
WEB
Transaction authorized on the
Internet/Wireless Network.
Payment may or may not be
initiated.
Descriptive word and Company
name
Consumer can authorize single or
recurring entry.
Two years following transaction or
termination of authorization.
No limit
Number of presentments
Three presentments
Three presentments
Authorization
requirements
Must authenticate consumer and
signify assent.
Must be recorded or notification
provided to consumer.(If
recurring, notification must be
provided to consumer)
Written Statement required
Written Statement required
Follow error resolution procedures.
Follow error resolution
procedures.
60 days from statement date. (Reg
E)
60 days from statement date. (Reg
E)
R10
R10
Can revoke single entry if
scheduled in advance
(S contained in Payment Type
Code Field)
Yes, prior to posting of Entry.
Return R08 within 2 days of
settlement.
Can revoke single entry if
scheduled in advance
(S or a space contained in Payment
Type Code Field
Yes, prior to posting of Entry.
Return R08 within 2 days of
settlement.
Standard Entry Class Code
Description of the
transaction
If consumer claims not
authorized
If consumer claims error in
transaction
How much time does
consumer have to dispute
transaction?
What Return Reason
Codes should be used for:
Unauthorized
Authorization Revoked
Are Stop Payments
allowed?
Transaction authorized by
telephone.
Descriptive word and Company
name
Consumer can authorize single or
recurring entry.
. Two years following transaction
or termination of authorization.
No limit
NOTE: The ACH payment system allows a financial institution to return a consumer debit up to 60 days after the
transaction posts, if the consumer attests it is incorrect or unauthorized. Regulation E provides the consumer
protection for electronic transactions for a period of 60 days following the date of the statement. Refer to your Reg E
error resolution procedures for WEB and TEL transactions brought to your attention after the ACH 60 day right of
return, but within the Reg E 60 day from statement date period.