NACHA (the organization that oversees the Automated Clearing House (ACH) network) has established three reasons a consumer can dispute ACH charges to their account.
1. If it was never authorized by the account holder or the authorization was revoked.
2. If it was processed on a date earlier than authorized.
3. If it is for an amount different than authorized.
A consumer disputing an ACH charge must provide notice to the bank in writing that one of these three conditions exists.
Getting the correct Proof of Authorization for each ACH transaction type you take is important so that the consumer cannot have the it reversed and because it is required by NACHA.
PPD: A One Time or Recurring Business to Consumer ACH Transaction, requires a Written Authorization or "wet" signature.
TEL: A One Time ACH Transaction taken over the phone, requires either a Notice prior to Debit or a Recorded Call. (If you enter the email when taking the payment over the phone, PDCflow automatically sends the Notice Prior to Debit on your behalf).
WEB: A One Time ACH processed via a Website, requires input that validates identity, permission to debit and Revocation language.
CCD: A One Time or Recurring Business to Business ACH transaction, requires Written Authorization or "wet" signature.
PPD Transaction Authorization Guide
PPD transactions are by NACHA definition a credit or debit transaction initiated by a business that grants permission to debit a consumer's personal checking or savings account.
Authorization must be in writing and signed or similarly authenticated by the consumer, and the consumer must be provided with an electronic or paper copy of the authorization. The authorization must be readily identifiable as an authorization and must clearly and conspicuously state its terms (such as amount, date, and frequency of payment), as well as indicate that the Consumer may revoke the authorization by notifying the Business in the manner specified in the authorization (Cancellation information). The authorization process must evidence both the consumer’s identity and his or her consent to the transaction. Further, the NACHA Operating Rules require that the PPD entry contain certain information, including, but not limited to, the Consumer’s bank routing number and account number. In addition, the consumer must be provided an electronic or paper copy of the authorization.
How to Authorize:
- Have your consumer complete an authorization form which includes the amount of the payment, the date the payment is to process, and the bank account information from which the payment is to debit either via mailing the form and waiting for it to be returned via mail or use PDCflow eSignature Services, and have the Authorization back in minutes while PDCflow provides the consumer with a copy of the authorization.
- Keep the paper form on file within your office for 2 years or have PDCflow eSignature Services electronically store the authorization on your behalf with the payment information.
Recurring PPD Transaction Authorizations Guide
PPD Recurring transactions are a debit transaction initiated by a business that grants permission to debit a consumer's personal checking or savings account:
- for the same amount on a regular schedule, such as, weekly, bi weekly, or monthly
- for different amounts on a regular schedule
- for a payment plan for the payoff of a large debt
How to Authorize:
- Have the consumer sign and date an authorization form which includes the bank account to be debited, amount to be debited, the frequency of debits, and the start date, and the information on how to terminate the schedule, if needed either via sending the form in the mail and waiting for its return or by using PDCflow eSignature Services to send a copy of the schedule, receive dual authentication on the identity of the consumer, and obtain a "wet" signature within minutes.
- Mail the consumer a copy of the signed form or use PDCflow eSignature Services to email a copy of the schedule and signed authorization to the consumer instantly upon signing.
- Keep the form on file within your office for a minimum of 2 years after the schedule has been completed or use PDCflow eSignature Services to automatically store the authorization with the payment schedule digitally.
- Send a receipt via mail or email for each transaction processed as part of the schedule (PDCflow Recurring Schedule Module does this automatically on your behalf when an email address is entered into the payment information).
One Time TEL Transaction Authorizations Guide
A Telephone Initiated (TEL) transactions is a single entry (one time) debit to a consumer's account based on the authorization that was obtained verbally from the consumer via the telephone. NACHA permits TEL transaction types if the consumer initiates the call, or if the business initiates the call and there is a pre existing relationship between the customer and the business (such as a contract in place or the consumer has done business with the organization in the last 2 years).
How To Authorize:
- Voice Recording using this criteria (1) clearly state, during the call with the consumer that the consumer is authorizing an ACH debit to his/her account, and (2) express the terms of the authorization in a clear manner. The recorded authorization must include:
- The date the consumer's account will be debited
- The amount of the debit
- The consumer's name
- A telephone number that is available to the consumer and is answered during normal business hours for consumer inquiries
- The date of the verbal authorization
- A statement by the business that the consumer's authorization will be used to originate an ACH debit to the consumer's account
- A clear "I agree" from the consumer
2. Send a notice prior to debit either via email, fax or mail. (You must prove the notice was sent, you're not required to prove it was received.)
- Make sure the notice contains the consumer's name, the last 4 digits of the bank account number, the transaction amount, the date it was authorized, the date it will be processed, how the authorization can be cancelled and the time frame of cancellation, and a phone number the consumer can call to contact you. ***Note***PDCflow Payment Processing Services automatically emails a receipt with all the information listed above before the transaction is submitted to the bank as long as an email address is entered in the payment information.
3. A copy of the recorded authorization or notice prior to debit must be retained for two years from the date of the authorization.
WEB Transaction Authorization Guide
WEB transactions are authorized by a consumer entering payment information into a web form, actively checking a box to agree to the terms and conditions for the transaction and clicking a "Submit" button.
How to Authorize:
- Include Revocation language on the website or payment form being used (NACHA mandated language).
- Consumer can view and print or email a receipt.
- Sample of Revocation language: I understand that this authorization will remain in full force and effect until I notify COMPANY [insert manner of revocation, i.e., in writing, by phone, location, address, etc.] that I wish to revoke this authorization. I understand that COMPANY requires at least [X days/weeks] prior notice in order to cancel this authorization.
To Download the ACH and Debit Card Authorization Requirement Checklist that you see below, please click HERE.