Nacha Expands Receiving Depository Financial Institutions’ Role in Fighting Fraud

Receiving depository financial institutions (RDFIs) now have a defined role in monitoring the ACH payments they receive.

The newly defined role was established as part of a set of new rules approved by Nacha members, aiming to combat fraud that makes use of credit-push payments, Nacha, which governs the ACH Network, said in a Monday (March 18) press release.

The new rules create a base level of ACH monitoring for all parties in the ACH Network, except consumers, but do not shift the liability for ACH payments, according to the release.

The rules are designed to promote the detection of fraud through the credit-push payment flow, from the point of origination through the point of receipt at an account at the RDFI, the release said.

When fraud is detected, the originating depository financial institution (ODFI) can request the return of the payment, the RDFI can delay funds availability (within limits), and the RDFI can return a suspicious transaction, without waiting for a request or a customer claim, per the release.

In addition, a standard transaction description for ACH credits used in payroll payments has been added to help RDFIs monitor transactions, according to the release.

“All participants in the ACH Network have a part to play in reducing the incidence of fraud, and recovering when fraud has occurred,” Nacha President and CEO Jane Larimer said in the release. “I applaud Nacha’s members for taking this important step of self-governance.”

The new rules aim to reduce the incidence of business email compromise (BEC), vendor impersonation, payroll impersonation and other forms of fraud that result in payments being “pushed” from a payer’s account to a fraudster’s account, according to the release.

ACH debit and credit transactions are two of the most vulnerable areas of payments, Brian Holbrook, director of product strategy at LSEG Risk Intelligence, told PYMNTS in an interview posted in December.

“The risks are growing exponentially, especially as we continue to move money faster and at higher dollar amounts,” Holbrook said. “Protecting these payments across the entire value chain is really going to be important.”