ACH Operations Bulletin #2-2024: Voluntary Formatting Standard for Individual Name Field
Summary
In 2023, Nacha issued a Request for Comment on a proposal to standardize the use of the Individual Name field in consumer ACH Entries. While the proposal did not move forward to ballot, Nacha recommends that Originators and their Third-Party Service Providers consider voluntary adoption of the Individual Name field standard that was originally proposed. Standardization of the Individual Name field can provide benefits for monitoring Entries for potentially fraudulent payments.
This Operations Bulletin does not require any party to use the voluntary standard, nor to make use of the information contained in the Individual Name field beyond the requirements of the Nacha Operating Rules. This Operations Bulletin also does not require RDFIs to perform name matching when receiving, processing, and posting ACH Entries. The Nacha Rules permit an RDFI to rely solely on the account number when posting an Entry.1 Finally, this Operations Bulletin does not allow an RDFI to return an Entry solely because the name is not in this format.
Discussion
RDFIs have a view of incoming Entries as well as account profile information and historic activity on Receivers’ accounts. A risk-based approach to monitoring incoming ACH Entries may include velocity controls and anomaly detection. Considered together, these may trigger suspicion about a particular Entry. When suspicion arises, a name comparison can help determine the validity of an Entry or group of Entries destined for an account. Upon further investigation, a credit Entry with a mismatch between the name in the Individual Name field and the name on the account, or an account suddenly receiving multiple credits under multiple names, may indicate an account that is being used to receive illicit funds in a credit-push fraud scheme.
Credit-push fraud schemes often use social engineering to deceive a consumer or business into sending a credit payment to an account opened and controlled by a fraudster. When a fraudster imitates a legitimate Receiver and misdirects an Entry through false pretenses, the legitimate Receiver’s name in the Individual Name field may not match the name on the account receiving the funds. Standardization of the formatting of a name in the Individual Name field supports both automated and manual review of a suspicious Entry. Standardization of the Individual Name field also permits RDFIs to better identify when an account is receiving Entries for multiple Receivers who may not be named on the account. Thus, while Originators are not required to do so, following the recommended standardization format can help improve the integrity of the ACH system overall, which benefits all parties.
The Originator populates the Individual Name field to provide identification of the Receiver, and to aid in identifying Returned Entries. The field is a free form, alphameric, required field, open to Originator preference, resulting in a wide range of inputs and formats. This makes creating logic more difficult for the RDFI and limits the usefulness of automation to reconcile names on Entries with names on accounts.
Standardizing the input in the Individual Name field would allow parties to review Entries more easily, improve name recognition, and support logic by RDFIs to reconcile the name in the Entry against the name of the account owner.
Nacha recommends the following standard for the content of the Individual Name field:
LastName[space]AdditionalLastName[space]Suffix[space]FirstName[space]MiddleInitial[space]&[space]SecondaryReceiverFirstName[space]SecondaryReceiverMiddleInitial
If an Entry has two Receivers with different last names:
LastName[space]AdditionalLastName[space]Suffix[space]FirstName[space]MiddleInitial[space]&[space]SecondaryReceiverLastName[space]SecondaryReceiverFirstName
When using this standard, truncate the content to the field size (15 or 22 positions, as applicable by SEC Code2).
Items in italics indicate name elements that are common in the Individual Name field but do not always appear. When available, the elements Additional Last Name, Suffix, Middle Initial, Secondary Receiver First Name, Secondary Receiver Middle Initial and Secondary Receiver Last Name would be completed in the order shown when included for the Receiver and/or Receivers. No punctuation is used, including hyphens.
The examples below use all capital letters for the field contents. While all caps is not mandatory for the standard, Nacha encourages the use of all caps.
Examples:
Steven Jones
Steven E. Jones
Steven E. Jones, Jr
Steven E. Jones-Smith
Christopher H. Higginbotham
Chris H. Higginbotham Smith
Steven E. and Deborah L. Jones
Steve Jones and Debbie Smith
JONES STEVEN
JONES STEVEN E
JONES JR STEVEN E
JONES SMITH STEVEN E
HIGGINBOTHAM CHRISTOPH
HIGGINBOTHAM SMITH CHR
JONES STEVEN E & DEBOR
JONES STEVE & SMITH DE
1 Consistent with applicable law, Nacha Operating Rule 3.1.2 expressly provides that “[a]n RDFI may rely solely on the account number contained in an Entry for the purpose of posting the Entry to a Receiver’s account, regardless of whether the name of the Receiver in the Entry matches the name associated with the account number in the Entry.”
2 International ACH Transactions (IAT) do not include an Individual Name field. Instead, the Receiver’s name is placed in the Receiving Company Name/Individual Name field of the First IAT Addenda Record. Therefore, this standard does not apply to IAT Entries.
3 As provided by the Receiver to the Originator; inputs may vary based upon Originator records, such as William Anderson versus Bill Anderson. Originators and their Third-Party Service Providers should utilize this guidance for the Individual Name field, applying it to the data as received from the Receiver(s) and/or authorization.
