Question:

I have a question regarding holding funds on a suspected fraudulent ACH item.  We disclose that electronic direct deposits will be available on the day we receive the deposit under our Funds Availability Policy.  In the case we suspect fraud and are investigating the ACH credit, how long under the additional NACHA rules can we delay providing member credit under the new fraud delay rules?

Answer:

Reg CC funds availability rules will take precedence over NACHA operating rules.  But first things first – Reg CC only applies to transaction or checking accounts. If the ACH credit is deposited into a savings account or money market account, you can place a hold on the funds while you investigate the fraud. If the ACH credit was deposited to a checking account, the following rules will apply:

1. Reg CC requires funds received for deposit in an account by an electronic payment be made available for withdrawal “not later than the business day after the banking day on which the bank received the electronic payment.” (Your credit union has opted for same day availability for these deposits, which is fine).
2. The definition of “electronic payment” under Reg CC is very specific: “(p) Electronic payment means a wire transfer or an ACH credit transfer.”
3. If the deposit in question is an ACH debit entry (the credit union is ODFI, pulling funds from a member’s account at another financial institution), the transaction does not meet the definition of “electronic payment” or “check” under Reg CC and you can place whatever holds you need to while still meeting NACHA guidelines.
4. More likely, the credit union is the RDFI and the deposit in question is an ACH credit entry.  In that case you must make the deposit available for withdrawal according Reg CC funds availability rules even if you suspect fraud. That is, unless a hold exception under Reg CC applies.
5. Unfortunately, the exceptions reasons under Reg CC, won’t be too helpful in this case:
   • The new account exception does not apply to electronic payments
   • The large deposit, redeposited checks and reasonable cause to doubt collectability exceptions only apply to check deposits
   • The emergency condition exception isn’t applicable
   • You could use the Repeated Overdrafts exceptions to place a hold if the account meets those conditions.

Bottom line – there may be very little you can do to hold an ACH credit entry if you suspect fraud. However, you still should contact the ODFI as soon as you can – they can initiate a reversal. If you suspect your account holder that received the funds is the fraudster, you can evaluate the account for closure (or turning off ACH capabilities) and SAR reporting.

NACHA has published an RDFI Credit-Push Fraud Response Checklist that you might find helpful. You’ll see numbers 4 & 5 read: 

4. Determine funds availability

5. If appropriate, place a HOLD on funds