Managing Unauthorized ACH Debit

What is an ACH Payment?

An Automated Clearing House (ACH) payment is an electronic funds transfer from one bank account to another. These payments are commonly used for direct deposit of paychecks, automatic bill payments, and other recurring transactions.

What is an Unauthorized ACH Debit?

An unauthorized ACH debit occurs when a merchant or individual withdraws money from your bank account without your permission. This can happen if a company mistakenly has your banking information or if there is a fraudulent attempt to charge you.

Scenario: Unauthorized Charge

Let's consider a scenario where a customer notices an unauthorized charge attempt from a merchant. The customer did not authorize this charge and is concerned about how the merchant obtained their banking information. 

Q&A: What to Do About Unauthorized ACH Payments

Q: A merchant is attempting to charge my account without my authorization. What are my next steps?

A: If your client discovered an unauthorized ACH debit, you have a few options to protect their account and resolve the issue:

1. Stop Payment: You can place a "stop payment" on the specific merchant to prevent future debits from being processed. This can often be done via API: ACH Stop Payments

2. Dispute the Charge: Unauthorized received ACH debits can be disputed. Please see the process here:

   Submitting an ACH Dispute

3. Contact the Merchant: While not always effective, the customer can try to contact the merchant directly to inform them of the unauthorized charge and demand that they cease future attempts and remove your banking information from their system.

Q: How much time does a user have to dispute an unauthorized ACH Debit?

A: ACH dispute timelines depend on the type of account and the SEC Code of the transaction. In many cases for Business Accounts (e.g., CCD or similar business-purpose transactions) the returns must be initiated within 24 hours of the transaction posting.

Consumer Accounts have 60 days from the statement date to dispute an unauthorized ACH transaction.

Q: Can I block a specific merchant from charging my account?

A: Yes, placing a "stop payment" is the most direct way to block a specific merchant. This instructs your financial institution to automatically reject any future ACH debits from that particular company.

Q: What is the difference between a received ACH debit and an originated ACH debit?

A:

• Received ACH Debit: This is a payment that a merchant or company initiates to pull funds from your account. Unauthorized debits, like in the example, fall into this category. You have the right to dispute these charges.
• Originated ACH Debit: This is a payment that you initiate to send funds from your account to another party (e.g., paying a bill online). These payments are considered authorized by you and cannot be disputed in the same way. In some cases, for large originated payments, your bank might be able to request a recall from the receiving bank, but there is no guarantee the funds will be returned.