In 2024, several significant amendments to the ACH Rules will take effect, impacting the way companies process ACH payments. It’s essential for corporate Originators and Third-Party Senders to understand these changes to ensure compliance and efficiency in their payment processing operations.
Notifications of Change
One of the key updates impacts Notifications of Change (NOCs), effective starting June 21, 2024. Under this amendment, if the account information provided by a payee is erroneous or outdated, their financial institution may manually process the payment and send an NOC to the initiator. Corporate Originators need to update the information promptly for recurring payments and have discretion for one-time payments.
Prenotification Entries
Another significant change taking effect on June 21, 2024, is the expanded use of Prenotification Entries. Previously limited to verifying account validity before the first payment, this amendment allows companies to send prenotes at their discretion or as required by financial institutions.
Return Reason Codes
Return Reason Code updates take effect on October 1, 2024. This Rule change opens up Return Reason Code R17 to cover situations where the transaction is believed to be initiated under “false pretenses,” addressing concerns related to fraud.
Similarly, Return Reason Code R06 will allow financial institutions to request returns for fraudulent payments. While this use case is not mandatory, this amendment provides a means for recovering funds lost to fraud.
Other Rule Changes
Looking ahead to 2026, there are further changes regarding Standard Company Entry Descriptions and Origination Fraud Monitoring. The former outlines specific descriptions for payroll and online retail purchases, while the latter introduces requirements for companies to establish risk-based processes to identify and prevent unauthorized or fraudulent transactions. In light of these updates, corporate Originators and Third-Party Senders must prepare by updating policies, procedures and systems to ensure compliance and mitigate fraud risks effectively. For more information on these changes, download this 2024 ACH Rules Update for Corporate Originators and Third-Party Senders document.
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