ACH Chargebacks

The ACH Network is set up to empower consumers to dispute transactions that they believe were not validly authorized, and to give effect to consumer rights under Regulation E.

ACH Return Codes

What is an ACH Chargeback:

• An ACH transaction that was not properly authorized and is being disputed by your tenant/applicant. 
• The Receiving Depository Financial Institutions (RDFI) must accept Written Statements of Unauthorized Debit from their customers, credit the customers account in the amount of the unauthorized debit, and may return the debit to the Originating Depository Financial institution (ODFI) that warranted the validity of the authorization in the first place.

An example of the ACH Payment Process:

1. An Originator– whether that’s an individual, a corporation or another entity– initiates a Direct Payment transaction using the ACH Network. ACH transactions can be either debit or credit payments and commonly include online banking payments, person-to-person (P2P) and business-to-business (B2B) payments.
2. Instead of using paper checks, ACH entries are entered and transmitted electronically, making transactions quicker, safer and easier. 
3. The Originating Depository Financial institution (ODFI) enters the ACH entry at the request of the Originator. 
4. The ODFI aggregates payments from customers and transmits them in batches at regular, predetermined intervals to an ACH Operator. 
5. ACH Operators receive batches of ACH entries from the ODFI. 
6. The ACH transactions are sorted and made available by the ACH Operator to the Receiving Depository Financial Institution (RDFI). 
7. The Receiver’s account is debited or credited by the RDFI, according to the type of ACH entry. Individuals, businesses and other entities can all be Receivers. 

Most Common ACH Chargeback Causes:

• Authorization was never obtained, or the authorization was revoked by the customer
• The amount debited was different than the authorized amount
• The transaction was processed before the authorized date
• Certain business bank accounts require an Origination ID to debit the account, without it ACH debits may be blocked.