On March 19, 2021, NACHA, the governing body of the Automated Clearing House (ACH) Network, will implement the Web Debit Account Validation rule aimed at reducing fraud through a meaningful modernization of the ACH system.

The new rule, which requires all businesses to validate a consumer's bank account information when initiating a single or recurring ACH withdrawal/debit, is leaving many businesses with questions on how to implement a compliant and cost effective validation system prior to the one-year enforcement safe harbor period expiring March 19, 2022. 

As businesses begin evaluating the options to become compliant with the modernization rules, including using a third-party service provider, the attorneys of Buchanan Ingersoll & Rooney are available to help. Our Financial Services and Banking team can help businesses understand the rule changes, anticipate future changes, and help businesses protect themselves and their clients by:

  • Evaluating current electronic payment processes involving ACH Debits and advising on compliance with the pending and future NACHA modernization rules.
  • Negotiating vendor contracts with third party providers of account validation services and developing an implementation plan compliant with existing regulations, including the Fair Credit Reporting Act.
  • Reviewing the existing data protection, privacy, recordkeeping, audit and authorization policies to ensure they meet/exceed NACHA audit requirements.

Originally Published by Buchanan Ingersoll, March 2021

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