At the end of nearly every ACH Rules Compliance Audit exit interview, stop payments and written statements are mentioned. Understanding the difference between the two, and when each should be used, is important to ensure your financial institution is compliant with the ACH Rules. It is also important that you are advising and recommending the best available options to your account holder.

The two obligations are outlined separately in Article Three, Rights and Responsibilities of RDFIs and Their Receivers. See section 3.7, RDFI Obligation to stop payment (OR46 – OR47) and Section 3.12, Written Statement of Unauthorized Debit (OR51 – OR53). Within each rule are key terms and statements which should be noted.

Stop Payment:

1. A Receiving Depository Financial Institution (RDFI) must honor a stop payment order provided by a Receiver, either verbally or in writing, to the RDFI at least three banking days BEFORE the scheduled date of any debit entry to a consumer account other than a single entry. (Subsection 3.7.1.1, RDFI Obligation to Stop Payment of Recurring Entries)
2. An RDFI must honor a stop payment provided by a Receiver, either verbally or in writing, to the RDFI at such time and such a manner as to allow the RDFI reasonable opportunity to act upon the order PRIOR to acting on an ARC, BOC, POP or RCK Entry, or a Single Entry IAT, PPD, TEL or WEB Entry to a consumer account. (Subsection 3.7.1.2 RDFI Obligation to Stop Payment on Single Entries)

Written Statement of Unauthorized Debit:

1. A Receiving Depository Financial Institution (RDFI) must accept a Written Statement of Unauthorized Debit (WSUD) from a Receiver with respect to any:
   a. UNAUTHORIZED or IMPROPER debit Entry to a Consumer Account,
   b. UNAUTHORIZED or IMPROPER ARC, BOC, or POP Entry to a Non-Consumer Account,
   c. UNAUTHORIZED IAT Entry,
   d. INCOMPLETE Transaction to a Consumer Account or an INCOMPLETE Transaction involving any ARC, BOC or POP Entry, or
   e. IMPROPERLY Reinitiated Debit Entry (Subsection 3.12.5, RDFI Must Accept Written Statement of Unauthorized Debit).
2. The WSUD must be dated ON or AFTER the settlement date of the entry/entries for which recredit is requested. (Subsection 3.12.5, RDFI Must Accept Written Statement of Unauthorized Debit)

The key differences between stop payments and written statements are the timing of the request and the term unauthorized used for WSUDs.

Testing Your Knowledge:

Below are some scenarios the audit team has come across during several of our ACH Audit examinations. In these situations, based on the Rules, what is the best option – stop payment or written statement?

1. An account holder comes in and states they revoked authorization to a company this morning for a transaction that is scheduled to post tomorrow. The financial institution’s system parameters show the Entry is in the warehouse and is scheduled to post tomorrow. Stop payment or WSUD?
   Answer: Stop payment. The RFDI must honor a stop payment order provided by the Receiver to the RDFI at least three banking days prior to the scheduled date of the debit Entry. The RDFI may honor stop payment orders received within the three-day period at its discretion. Stop payment orders are placed in advance of a specific Entry or Entries and ensure that the Entry or Entries do not post to the Receiver’s account. Thus, stop payment is the best option, as long as the RDFI has a reasonable opportunity to act on the stop payment Order prior to acting on the Entry. (Reference: Authorization Revoked vs. Stop Payment’ on pages OG113-114 within the 2019 ACH Rules)
2. A consumer account holder notices an unauthorized transaction that is in memo post. Stop payment or WSUD?
   Answer: WSUD. The WSUD must be dated on or after the settlement date of the Entry or Entries for which recredit is requested. The Entry was noticed by the Consumer on the Settlement Date and is unauthorized, thus WSUD is the best option. (Reference: RDFI Must Accept Written Statement of Unauthorized Debit on page OR52 within the 2019 ACH Rules)
3. A consumer account holder notices a transaction that posted to the account yesterday for an amount different than what he/she authorized. Stop payment or WSUD?
   Answer: WSUD. An RDFI must accept a WSUD from a Receiver with respect to any unauthorized or improper debit Entry to a Consumer Account. A debit Entry is not authorized by the Receiver if the debit Entry was initiated in an amount different than what was authorized. So, WSUD is the best option. (Reference: Unauthorized Debit Entry on page OR51 within the 2019 ACH Rules)