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As of March 18, 2022, Nacha’s account validation rule requires ACH originators of WEB entries to use a commercially reasonable fraud detection system to verify the first time a consumer checking account is used for an electronic (ACH) payment, if the payment is initiated over an online channel, the account number must be validated first. WEB debit entries, by definition, are debits to consumers’ accounts where authorization is communicated via the internet or a wireless network. Nacha does not require a specific method to be used for account validation but has provided examples of acceptable forms of validation.
The addition of Nacha’s account validation rule supplements existing guidance which simply required the originator—the creator or sender of the payment—to use a “commercially reasonable fraudulent transaction detection system.” The purpose of this rule is to clarify that a commercially reasonable fraud detection system must have the capability to validate accounts. This means that, before a WEB entry is processed, Nacha will require validation that the account it originated from is, in fact, a valid account for that financial institution and that it is able to accept an ACH transaction.
The account validation requirement applies to the first use of an account number or change to the account number. Several methods are available to comply with the new rule. Please note, the methods can be used as part of a waterfall methodology.
The methods appropriate are:
There are several pros and cons with each validation method, which is why it is highly recommended to use more than one. Using a combination of methods helps ensure consumers have a frictionless experience while also providing higher levels of fraud prevention.
Here is the schedule for the implementation of Nacha’s Fraud, Risk Management, and Monitoring Rules
SWBC's Financial Institution Group will continue to support the needs of our clients during the evolution of regulatory and rule changes specifically for payments.
Nicole Hill is the SVP of Payment Risk and Compliance of Swivel, an SWBC Company. She is responsible for supporting the growth and overseeing the Regulatory Compliance and Risk Management for the Payment Organization. Nicole also serves as the designated AML/BSA compliance officer for the payments organization and is expanding the governance framework as the payments team adds new functionality and products to support the client base.
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