I think this recent conversation in the Discussion section of our Member Community will be of interest to many members:
Q: I am reaching out to see what the industry standard is for reviewing unauthorized return rates. Are financial institutions notifying Originators when they have 2 unauthorized transactions in a total of 2,000 entries? Or do you start the conversation when there are 1,000 unauthorized out of 2,000 entries? How are institutions handling this process?
A: When an origination partner exceeds a Return rate threshold (or level), the ODFI’s obligation is outcome-based, not method-based. Nacha sets the requirement and the timeframes, but it does not provide a prescribed “answer” for how an ODFI must achieve compliance. The task is straightforward to describe but not always straightforward to execute: lower the applicable Return rate to a compliant level and keep it there.
There is no single industry-standard method for doing that because the facts and circumstances matter—volume, timing, return mix, and the averaging window all matter. In many cases, more than one action may accomplish the task. When that is true, the practical approach is to use the method that the origination partner can implement quickly and sustain.
It’s also important to be candid about the maths. (Well, it's important for me to be candid.) In some situations, the only available lever may be to suspend origination activity for a period of time. Even then, suspension may not immediately cure the rate if the offending Entries and Returns are concentrated in the most recent averaging period. In other words, there are scenarios where an ODFI can take appropriate, good-faith action and still be unable to mathematically reduce the rate on demand. That outcome is frustrating, but it is a real and not uncommon aspect of rate-based compliance.
This is why the most important work happens before a threshold is breached. An ODFI should already have its response options documented in procedures that implement approved policy. Those procedures should describe the range of actions the ODFI may take—monitoring, corrective action plans, volume restrictions, or suspension—so decisions are not being made under pressure. Clear documentation also allows the ODFI to articulate the rationale for its actions to origination partners, management, and examiners.
There is no single procedural answer that fits every ODFI. What matters is that the ODFI understands the maths, recognizes that lowering a Return rate is not always immediate or linear, and has pre-approved, defensible options available when intervention becomes necessary.
I’d be interested in hearing how other ODFIs have structured their response options—particularly where the maths made short-term remediation difficult despite timely intervention. Please reach out at 800-475-0585, ext. 1103 if you'd like to talk share your insight!
*Capitalized terms are used as defined in the 2026 Nacha Operating Rules.