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NEWS RELEASE
CONTACT:
Michael Herd
mherd@nacha.org
Unauthorized ACH Telephone Payments Down 88 Percent, NACHA Says
Telemarketers Switching to Demand Drafts
Herndon, Virginia, October 14, 2003– The incidence of unauthorized telephone-initiated e-check payments over the Automated Clearing House
(ACH) Network has declined for the fourth consecutive quarter, according to new figures from NACHA – The Electronic Payments Association. A sustained campaign by NACHA and its members has succeeded in
lowering the rate of such unauthorized payments by 88 percent.
"NACHA receives reports from the ACH Operators and from financial institutions that allow unauthorized telephone payments to be traced back their
source of origination," said Elliott C. McEntee, President and Chief Executive Officer of NACHA. "Many banks, as well as law enforcement and consumer protection agencies, are indicating that telemarketers have
switched to using demand drafts now that they understand how easily their ACH payments can be traced. With new monitoring, alert and rule enforcement mechanisms that NACHA has put permanently in place, the
risk of unauthorized ACH telephone payments is greatly reduced."
On September 14, 2001NACHA 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. NACHA estimates that consumers will make 175 million such e-check payments in 2003, mostly to pay bills such as credit cards, mortgages and utilities. In its rules, NACHA expressly prohibits use of e-checks by telephone in outbound telemarketing to consumers with whom there is no existing relationship.
NACHA will be implementing additional measures to further improve risk management. These measures include requiring financial institutions
that originate telephone e-checks to register with NACHA and identify the companies and payment processors that use their services, and adopting new rules to explicitly bind third-party payment processors to the
NACHA rules. NACHA also will be developing a proposal to establish a cap on the dollar amount of a financial institution's originations as a percentage of its capital.
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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