Prompt Recredit: What Exactly Does That Mean?

Brian Laverdure

By: Caitlyn Mullins, AAP, Manager, Audit Services

When an account holder sees a strange transaction hit their account, usually one of their first thoughts is ‘I want my money back, and I want it back now!’ Rightfully so, no one wants to pay for something they didn’t authorize.

However, when your account holder standing there, tapping their foot, checking their watch and breathing great big sighs of impatience, it’s helpful to know the rules and regulations governing disputed transactions and the timing requirements for providing recredit to the account holder. The challenging part, aside from dealing with an impatient account holder, often comes down to understanding the interplay between Regulation E and the ACH Rules.

What do the ACH Rules Say?

When an account holder fills out a Written Statement of Unauthorized Debit, the ACH Rules state the RDFI must promptly recredit the account. This applies if the account holder notifies the financial institution within 60 days from the Settlement Date of the transaction and the notification from the Receiver is in accordance with Section 3.12 (Written Statement of Unauthorized Debit). However, the Rules do not explicitly define “prompt”. So, how “prompt” must the “prompt” recredit be? Luckily, Regulation E addresses timing requirements for correcting a verified error, so let’s look there.

What does Regulation E Say?

If the account holder notifies the financial institution of the disputed transaction within 60 days of the periodic statement date, Regulation E states that the financial institution must investigate to determine whether an error occurred. If it is determined that an error did occur, Regulation E states that correction to the error must occur within one business day after determining an error has occurred. In other words, Regulation E addresses the concept of “prompt” as one business day.

So, what does this mean?

This means by signing a Written Statement of Unauthorized Debit, the account holder is declaring an error has occurred BUT since the ACH Rules provide an option to return the transaction and provide permanent credit to the account holder, no investigation is needed. Essentially, the Written Statement of Unauthorized Debit is fast-tracking the investigation process and jumping ahead to Regulation E’s requirement to recredit the account within one business day. So, when an account holder signs or similarly authenticates a Written Statement of Unauthorized Debit, your operations staff should act promptly and recredit their account within one business day as an investigation for an unauthorized ACH entry is over as soon as the Written Statement of Unauthorized Debit is signed or similarly authenticated.

The good news here is with a signed or similarly authenticated Written Statement of Unauthorized Debit, you can recredit the consumer’s account promptly so they can take their toe-tappin’, watch-lookin’, big-sigh-heavin’ self to the DMV or post office or anywhere else that makes them wait so they can put their impatience to good use.

Want to learn more about Regulation E? Join us for our in-person Payment Systems Update, happening at over 20 locations throughout the EPCOR footprint! As we step back into in-person meetings, please note that seating will be limited. Register early to secure your preferred date and location. For those not able to attend in person, there is an abbreviated virtual update available.