22 Apr New NACHA Rules Taking Effect
No Second Chances to Play by the NACHA Rules Taking Effect Soon
NACHA (which stands for the National Automated Clearing House Association), the governing body of automated clearing houses and a federal banking organization, established guidelines last year that will take effect in the fall of 2015.
Part of these guidelines caps total ACH returns to 15 percent. If 100 transactions are sent through a clearing house, only 15 of those can be returned. Go higher than 15 percent, and the ACH provider can terminate transaction privileges. No ACH transactions, no ability to do business. Period.
The old days are over of sending ACH transactions through willy-nilly and seeing what pays. Way over. No longer can lenders push through ACH transactions that are highly likely to be returned hoping to recover a few hundred bucks. This approach not only racks up high service fees for consumers (banking fees are also under scrutiny by the Consumer Finance Protection Bureau (CFPB)), but can leave lenders without an ACH provider or the hopes of contracting one.
In higher-risk environments such as the short-term loan industry, lenders must take precautions with processes in place that avoid submitting ACHs that simply won’t clear. And splitting payments (i.e. a $600 loan into six $100 payments) is not a workaround anymore since it could result in six dings toward NACHA’s 15 percent cap compared to the one of $600.
So what are short-term lenders to do? The first line of defense is choosing the “right” consumers. The second is knowing when to say when as far as pulling the plug on attempted ACHs. Rather than run the risk of losing accepting ACH payments, align with a partner, like Centrinex, who helps develop and implement effective and NACHA-compliant ACH strategies.
Our clients count on us to ensure ACH authorizations are in place and consumers fully understand the ACH process. This is the first thing our call center does when consumers apply for a loan since the penalties for not having signed authorizations proving consumer agreement are steep.
When a customer applies for a loan, Centrinex ensures signed documents are in place and that applicants fully understand ACH authorizations. This is key for our call center clients because the consequences can be severe if proof of the signed authorization cannot be produced.
Centrinex reviews ACH debits to avoid excessive bank fees and to stay below NACHA’s 15 percent cap. This is not a new policy. It’s something we’ve been doing for quite some time. The only beneficiary of attempting ACH debits day after day is the bank that collects the overdraft fees. Excessive ACH debits to attempt to collect a debt are bad business, upsetting the consumer and landing the lender in hot water with organizations like NACHA.
Centrinex is dedicated to avoiding ACH abuse (along with NACHA) and building strong relationships between lenders and consumers. We work in cooperation with our clients and regulatory agencies to collect payments promptly and fairly, which is good business for everyone.