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NEWS RELEASE
CONTACT:
Michael Herd
mherd@nacha.org
Unauthorized ACH Telephone Payments Down 84 Percent, NACHA Says
Herndon, Virginia, July 15, 2003 – Recent actions taken by NACHA – The Electronic Payments Association and its members have succeeded in
lowering the rate of unauthorized telephone-initiated payments on the Automated Clearing House (ACH) Network by 84 percent.
"Reducing the number of unauthorized payments improves ACH Network quality for all ACH participants, including consumers and their financial
institutions," said Elliott C. McEntee, President and Chief Executive Officer of NACHA.
On September 14, 2001 NACHA Operating Rules went into effect permitting consumers to make e-check payments over the telephone. An e-check over the telephone is an easy and convenient option for consumers to make one-time payments. In 2002, there were more than 67 million such e-check payments, mostly used by consumers to pay bills such as credit cards, mortgages and utilities, and there were no problems experienced with the vast majority of these payments.
In its rules, NACHA expressly prohibits use of e-checks by telephone in outbound telemarketing to consumers with whom there is no existing
relationship. By mid-2002, however, NACHA was tracking a significant increase in the frequency in which consumers claimed that they had not authorized telephone-initiated e-checks.
In response, NACHA and its members began a comprehensive effort to tackle the issue. For the past twelve months, NACHA has been
aggressively working with financial institutions to identify the sources of unauthorized telephone-initiated ACH payments.
Other actions that were taken include: new rules that require banks to report certain data on unauthorized payments to NACHA; ACH operations
bulletins on risk management; streamlining NACHA's rules enforcement mechanism and increasing fines for rules violations; new industry risk management initiatives; industry education; and numerous briefings and
other assistance for federal consumer protection and banking regulatory agencies.
The Federal Trade Commission recently filed a complaint in the U.S. District Court for the Western District of Texas charging a payment processor
with providing assistance to fraudulent telemarketers in using the ACH Network to debit consumers' accounts in violation of the NACHA Operating Rules.
"Consumers should never give their checking account information to telemarketers or to callers claiming to need to confirm or verify checking
account information," said McEntee. "It is fine to use your checking account information over the phone to pay bills or to pay companies you know and trust, but you should safeguard your checking account
information just as you would any other sensitive personal information."
The ACH Network has been safely used for over 30 years for many types of electronic payments. NACHA estimates that 135 million Americans use
the ACH Network to receive their pay or government benefits by Direct Deposit. Consumers also paid three billion bills in 2002 using the ACH Network.
About NACHA - The Electronic Payments Association
NACHA is the leading organization in developing electronic solutions to improve the payments system. NACHA represents more than 12,000
financial institutions through direct memberships and a network of regional payments associations, and 650 organizations through its industry councils. NACHA develops operating rules and business practices for
the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment (EBPP, EIPP), e-checks, financial electronic data
interchange (EDI), international payments, and electronic benefits transfer (EBT). Visit NACHA on the Internet at www.nacha.org
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