|In article , | Dan Lanciani wrote: | |> Have you asked all the companies that you pay by check to stop making |> the conversion to ACH debit? According to the last version of the NACHA |> rules that leaked out, members are required to allow you to opt out of |> this process. (Based on the discussion in the paper that showed up on |> the web for a while NACHA was very reluctant to make this rule, but |> apparently there was some threat that it might become a legal requirement |> if they didn't do it voluntarily.) Now of course companies can make it |> very difficult for you to talk to the right person to opt out, and it can |> be tricky to discuss the NACHA rules since those rules are not available |> to non-members (even though they operate more-or-less as legal regulations |> governing our transactions). | |I work for a major international bank, albeit not in the checking part |of the house.
Would you know how I might obtain an account that does not allow ACH debits without my authorization (or that simply does not allow them)? If this is impossible in the US, why is that the case?
|Opting out of ACH conversion is, frankly, silly.
Please explain specifically why it is "silly." If I opt out of ACH check conversion and the payee wants to do anything electronic they have to use a Check21-style truncation. This means that I get a legal substitute check (cancelled) and have all the rights and guarantees specified by the Check21 legislation--legislation that is publically available. (Even if you do not normally receive checks back you may request such a substitute check; there may be a fee.) As a side benefit, when a random ACH debit shows up on my account I can state truthfully that I have not authorized any such activity at all.
If I allow the payee to direct debit my account I get a simple line on my statement for the ACH/ARC debit with an ambiguous payee string, no pointer to the account where the money went and (at least in the case of my three banks, though I gather this differs) no reference number. Inquiries to my banks about such debits generally result in a statement that they cannot tell me anything about it but that it must be correct because it is electronic. Although Regulation E (which in theory governs such transactions) is publically available, that regulation delegates the definition of authorization to the industry, and the NACHA rules that implement that policy are not available to non-members. This makes it very hard to argue about the validity of a transaction.
There is also the minor additional disadvantage that in many cases your "authorization" to convert a check to an ACH debit also authorizes the payee to debit an additional $25 fee if something goes wrong the first time. A payee can't normally just bump up the amount of a negotiable instrument without going back to the maker. Allowing a payee to do this unilaterally is just "silly."
|Trust me, the moment |that paper check hits the depositor's bank or the clearing-house, it's |going to be scanned and shredded.
This is simply not true. Pretty much the only Check21 truncations I've seen come from bank (i.e., credit card) payees where I have opted out of ACH conversion. In all other cases I still get my original checks back. Many consumers (misled by the banks) think that ACH debits *are* Check21 truncations so they don't realize that they can opt out. They may also be confused because their own bank doesn't return checks.
|I'm not debating the merits of Check 21; I'm personally not thrilled |about it myself.
IMHO, Check21 is infinitely better than ACH/ARC conversion. It maintains the item as a negotiable instrument and adds a few new guarantees of amount and non-duplication to the existing body of (again, publically available) legislation governing the transaction. The worst thing about Check21 is that banks deliberately conflate it with ACH transactions, picking the best properties of each for themselves.
ACH debits as originally advertised would have been ok (at least they would have been ok if the bank provided reasonable documentation). The bank sends your money to anyone on the ACH network who asks (with no proof that you authorized the transaction) but you have 60 days to reverse the transaction by stating that it was unauthorized. Unfortunately, the definition of "authorized" has become very broad, and somehow the responsibility has fallen on the consumer to prove the transaction unauthorized rather than on the payee to prove it authorized.
The worst example so far appears to be the TEL debit type where all the payee has to do is send the consumer a letter of "confirmation" (copy kept on file) on or before the date of debit. Naturally, they are supposed to have authorization in the first place, but they don't have to prove it. Also, intuitively, you would think that on receipt of the letter the consumer would be able to contact the payee to abort the debit if it was not authorized, but in my (limited) experience this does not work. In fact, a rep hung up on me after loudly refusing to cancel such a debit even after I explained that the authorizing conversation mentioned in the letter of "confirmation" never took place.
|The banks, however, are all for it. Consider a large |bank like Bank of America. Can you imagine how much money used to be |spent just hauling cancelled checks back and forth? The trucks, the |gas, the security, the extra postage for the check drafter's |statement... all for little slips of paper that most people throw out |when they arrive in the mail. | |By scanning the checks as soon as possible when they hit the banking |system and converting them to data, all that expense of moving physical |paper around vanishes. In this day and age, money *is* data.
Yes, banks like to make more profit which they certainly won't share with me. Check21 good; ACH better. For the banks. Why would I want to participate in ACH debits if I don't have to?
|Even |before Check 21, the movement of the paper check through the ACH system |didn't control where your funds were at any given time -- it was the |movement of bits through ACH systems that moved the money from one |account to another.
I don't understand. Are you now using the term "ACH" to refer generally to the check clearing house system?
|Several banks have even been working with ATM vendors on creating ATMs |that will accept checks through a slot-feed mechanism, without an |envelope. The ATM would scan the check as it was inserted and convert |it to an ACH draft, and shred the check within the ATM after the |customer verifies the scanned information.
Conversion of a check to an ACH/ARC type debit requires prior approval of the check maker. (At least it did per the last version of the ACHA rules that floated around.) That approval can be easily given, e.g., by merely failing to object to prior notice in a bill or by handing a check to a clerk in a store with a clearly posted policy. But generally the entity making the conversion has to be trusted in the sense of being a NACHA member of client thereof. What obligation would the user of such an ATM have to provide proof that the maker of the check authorized its conversion to an ACH debit?
Dan Lanciani ddl@danlan.*com