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Warranty Claims on Remotely Created Checks Through the ACH Network Industry Survey December 16, 2008 Response Deadline February 6, 2009 This Request for Information regards a concept that would allow paying banks to make warranty claims on unauthorized Remotely Created Checks (“RCC”) through the ACH Network. Responses are due February 6, 2009. In order to determine the scope of interest by ACH Network participants and other payment system stakeholders, NACHA seeks input from a broad range of organizations, as well as from various functional responsibilities within organizations. Financial institutions may need to coordinate responses between both ACH and check operations. NACHA specifically seeks input from: Financial institutions’ ACH and check operations; Financial institutions’ risk management/security/legal departments; ACH Network end-users (e.g., corporate Originators and Receivers); Financial institution regulators; Law enforcement and consumer protection agencies; Any other interested parties or relevant functional area. Survey responses or other comment letters are due to NACHA by February 6, 2009. NACHA Staff Contacts Return completed surveys to: Questions: Maribel Bondoc, Manager, ACH Network Rules Fax (703) 787-0996 E-mail: [email protected] Michael Herd, AAP, Managing Director, ACH Network Rules Phone (703) 561-3924 E-mail: [email protected] Ian Macoy, AAP, Managing Director, Network Development Phone (703) 561-3929 E-mail: [email protected] NACHA Request for information - Warranty Claims on RCCs Participant Survey, 12/16/08, Page 2 Section I - Respondent Information Name: Title: Organization: Phone: E-mail: Please indicate your organization’s role(s) in the ACH Network: ODFI RDFI ACH Operator Originator Receiver Regional Payments Association Government Third-Party Service Provider Software Vendor Industry Association Other Would your organization be willing to be contacted in order to provide more information on the topics included within this survey? Yes No Financial Institution Respondents – Please Complete Asset Size ____ less than $250 million ____ $1 - $100 billion Annual ACH origination volume # entries Annual ACH received volume # entries ____ $250 million - $1 billion ____ greater than $100 billion $ $ What areas of your organization provided input for the responses to this survey? ___ ACH Operations ___ Check Operations ___ Risk Management/Security ___ Legal ___ Customer Service ___ Information technology/software ___ Other: ______________________ Corporate Originators and Receivers – Please Complete Annual ACH origination volume: Annual ACH received volume: # entries # entries $ $ NACHA Request for information - Warranty Claims on RCCs Participant Survey, 12/16/08, Page 3 Third Party Service Providers and Software Vendors – Please Complete Which parties to ACH payments do you serve? Originators ODFIs RDFIs Section II - Overall Concept 1. Are unauthorized RCCs a problem for financial institutions and/or their customers? Yes No Don’t Know Specify why or why not: If yes, is the problem increasing or decreasing? Increasing Decreasing Don’t Know Specify why: 2. Will allowing paying banks to make warranty claims on RCCs through the ACH Network address this problem? Yes No Don’t Know Specify why or why not: 3. Does your organization support the concept of allowing paying banks to make warranty claims on RCCs through the ACH Network? Yes No Don’t Know Specify why or why not: If yes, should there be a time limit in which the warranty claim can be made? (The current Federal Reserve check adjustment system requires the claim to be made within 90 days.) NACHA Request for information - Warranty Claims on RCCs Participant Survey, 12/16/08, Page 4 _____ 60 days (consistent with unauthorized ACH debits) _____ 90 days (consistent with Federal Reserve check adjustments) _____ 1 year (consistent with Regulation CC warranty) _____ Other: ___________________________ 4. Under this concept, NACHA and the ACH Operators would be able to collect data on the sources of unauthorized RCCs. Would this data be of value to payments system stakeholders and/or others? Yes No Don’t Know Specify why or why not: 5. Are there other payment-related warranty claims that could be made via the ACH Network? Yes No Don’t Know Please specify: Section III – Financial Institutions Paying Banks/ODFIs In this concept, the paying bank of the RCC is both the Originator and ODFI of a forward ACH debit (the warranty claim entry). 6. How significant a problem are unauthorized RCCs for your organization? (1 = not significant, 5 = very significant) 1 – Not significant 2 3 4 5 – Very significant Don’t Know Specify why: NACHA Request for information - Warranty Claims on RCCs Participant Survey, 12/16/08, Page 5 7. Please estimate the number of RCCs per month that your customers claim are unauthorized. Number of RCCs per month that are claimed to be unauthorized: __ _________ ______ Of this number, please estimate the number or percentage for which you make a warranty claim: Of the number for which you make a warranty claim, please estimate the number or percentage which occur before 90 days and after 90 days of the original presentment: Before 90 days: After 90 days: 8. How do you currently make warranty claims for unauthorized RCCs that are within the 90day period after the original presentment (check all that apply)? _____ Fed adjustments _____ Clearinghouses _____ Without-entry claims made directly to bank of first deposit _____ We don’t _____ Other: _______________________________ 9. Do you currently make warranty claims for unauthorized RCCs after the 90-day period after the original presentment? Yes No Don’t Know Why or why not? 10. Do you have a dollar threshold for making claims (i.e., you do not make a claim for RCCs below a certain dollar amount)? Yes No If yes, please indicate a range or the exact threshold: _____ $0-50 _____ $50-100 Don’t Know NACHA Request for information - Warranty Claims on RCCs Participant Survey, 12/16/08, Page 6 _____ $100-250 _____ Above $250 OR _____ Exact Amount: $__________________ 11. What is the average dollar amount (or range) of your warranty claims? _____ Average Dollar Amount: $__________________ OR Range: _____ $0-50 _____ $50-100 _____ $100-250 _____ Above $250 12. If warranty claims for unauthorized RCCs could be made through the ACH Network, would your organization be interested in using it? Yes No Don’t Know Specify why or why not: 13. If the time period for making the claim via ACH was longer than 90 days after the original presentment, would your organization be more likely to use it? Yes No Don’t Know Specify why or why not: Operational Considerations 14. Can your organization manually originate a forward ACH debit entry? Yes Specify how or why not: No Don’t Know NACHA Request for information - Warranty Claims on RCCs Participant Survey, 12/16/08, Page 7 If yes, would the department or personnel responsible have access to the RCC (original or image/copy) in order to obtain the necessary information? Yes No Don’t Know Specify why or why not: Would the department or personnel responsible be able to identify the bank of first deposit from the information on the RCC? Yes No Don’t Know Specify why or why not: 15. Can your organization manually create an ACH addenda record that would carry additional information about the RCC, if necessary, such as an account number and/or check sequence or research number? Yes No Don’t Know Specify why or why not: 16. Does manually creating ACH debit entries create any new risk management issues? Yes No Don’t Know Specify why or why not: 17. Does your organization have any other concerns or comments on how warranty claims would be processed or other operational considerations? Yes Please specify: No Don’t Know NACHA Request for information - Warranty Claims on RCCs Participant Survey, 12/16/08, Page 8 Banks of First Deposit/RDFIs In this concept, the bank of first deposit is both the RDFI and Receiver of a forward ACH debit (the warranty claim entry). 18. How significant a problem are unauthorized RCCs for your organization? (1 = not significant, 5 = very significant) 1 – Not significant 2 3 4 5 – Very significant Don’t Know Specify why: 19. Please estimate the number of warranty claims for unauthorized RCCs that your organization receives per month: Number of warranty claims for RCCs per month: __ _________ ______ Of the number for which you receive a warranty claim, please estimate the number or percentage which occur before 90 days and after 90 days of the original presentment: Before 90 days: After 90 days: 20. What is the average dollar amount (or range) of the warranty claims you receive? _____ Average Dollar Amount: $__________________ OR Range: _____ $0-50 _____ $50-100 _____ $100-250 _____ Above $250 NACHA Request for information - Warranty Claims on RCCs Participant Survey, 12/16/08, Page 9 Operational Considerations 21. What information would your organization need to receive with the warranty claim to be able to process it? Please specify: 22. Would the personnel or department receiving the warranty claim have access to the information or systems necessary to process it? Yes No Don’t Know Specify why or why not: 23. If your organization received an ACH debit to a general ledger account for a warranty claim, how would your organization process or handle it? Please specify: 24. If the ACH debit carried the original depositor’s account number in an addenda record, how would your organization process or handle it? Please specify: 25. Does your organization have any other concerns or comments on how warranty claims would be processed or other operational considerations? Yes Please specify: No Don’t Know NACHA Request for information - Warranty Claims on RCCs Participant Survey, 12/16/08, Page 10 Section IV - Other General Questions 26. What benefits does your organization believe would be derived from this concept? 27. Does your organization have any concerns about or foresee any negative effects/risks related to this concept? 28. In order for the ACH Operators and NACHA to collect data on warranty claim entries, the transactions would have to be uniquely identified. Does your organization have any suggestions or preference on how warranty claim entries can be uniquely identified?: _____ New Standard Entry Class (SEC) Code _____ Unique transaction description in Company Entry Description field (similar to defined descriptions for reversing and reclamation entries) _____ Don’t know _____ Other If other, please specify: 29. Please identify any other specific issues that have not been addressed elsewhere in this ACH Participant Survey (feel free to attach additional pages):