Hurricane season runs June 1 – November 30. Is your institution adequately prepared to maintain business continuity in payments operations?
This is the time of year when we remind our members that the excused delay provision of the Nacha Operating Rules, found on page OR 3, Section 1.5, is intended to apply to processing delays caused by an interruption of communications or computer facilities that is out of the control of the financial institution, due to weather emergencies (“acts of God”) or war. This rule is not intended to excuse delays due to general failure of a financial institution’s or processor’s computer system or other equipment, which should be addressed in a contingency plan. It is important to note that financial institutions in geographic areas where extreme weather conditions are a routine seasonal occurrence should have business continuity plans that address those conditions and should not rely on the Excused Delay rule.
If your institution’s ability to process ACH returns is impacted by circumstances where Excused Delay would be applicable, once your system is operational you should originate your return transactions as you normally would. If you receive these returns from the ODFI as dishonored returns bearing code R68, Untimely Return, then you should contest the dishonored Return using code R73, Timely Original Return. If the ODFI contacts you for clarification, you should explain that you are using the Excused Delay provision of the Nacha Operating Rules. You may choose to proactively call the ODFI before sending the original return but are not obligated to under the Rules. Note that Nacha does not invoke or declare the excused delay provision of the Rules to be in effect. Each Participating DFI should be prepared to explain and defend its use of this provision according to its individual circumstances. Institutions should make sure they incorporate returns and adjustments into their business continuity plans along with file origination and incoming file processing.
You should contact ePayResources to get our assistance in communicating your need to invoke the excused delay provision to other financial institutions across the country. Proactive communication can help reduce the number of dishonored Returns you receive. You should be aware that some ODFIs may not handle the contested dishonored Return correctly and may dishonor it again. This is not allowed under the Nacha Operating Rules, and you should contact us for assistance if this happens to you.
Want to learn more? Members with ePayU access can view our on-demand course, Disaster Preparedness: Understanding Excused Delay!
The Federal Trade Commission also has resources you can share with your customers or members about being prepared financially, staying safe, and avoiding scams.
If you have questions about late returns, payments business continuity, and Excused Delay, ask ePayResources on the Payments Answerline™ at 800-475-0585, Option 1.