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Differentiating Unauthorized Returns - New R11 Use Becomes Effective

The Change:  A different return code (R11) will be re-purposed to be used for the return of a debit in which there is an error, but for which there is an authorization. The re-purposed reason will be “Customer Advises Entry Not In Accordance with the Terms of the Authorization”. Return reason code (R10) will continue to be used when a consumer claims he or she does not know the Originator, does not have a relationship with the Originator, or did not give authorization for the entry. The reason will be “Customer Advises Originator is Not Known to Receiver and/or Is Not Authorized by Receiver to Debit Receiver's Account”.

R11 returns will have many of the same requirements and characteristics as an R10 return, and are still considered unauthorized under the Rules:

  • Incorrect EFTs are subject to the same error resolution procedures under Regulation E as unauthorized EFTs
  • RDFIs’ effort to handle the customer claim and obtain a WSUD remain the same as with the current obligations for R10 returns
    The RDFI will be required to obtain the Receiver’s Written Statement of Unauthorized Debit
  • The return timeframe is 60 days
  • R11 returns will be included within the definition of Unauthorized Entry Return Rate
    R11 returns will be covered by the existing Unauthorized Entry Fee
  • The new definition and use of R11 does not include disputes about goods and services, just as with the current definition and use of R10

A key difference between R10 and R11 will be that with an R11 return an Originator will be permitted to correct the underlying error, if possible, and submit a new Entry without being required to obtain a new authorization.

  • The new Entry must be Originated within 60 days of the Settlement Date of the R11 Return Entry
  • Any new Entry for which the underlying error is corrected is subject to the same ODFI warranties and indemnification made in Section 2.4 (i.e., the ODFI warrants that the corrected new Entry is authorized)
New Uses for R10 - Used by the RDFI when:
  • Receiver does not know has no relationship with the Originator
  • Receiver has not authorized the Originator to debit the account
  • For ARC and BOC entries, the signature on the source document is not authentic or authorized
  • For POP entries, the signature on the written authorization is not authentic or authorized

New Uses for R11

Used by the RDFI to return an entry for which the Originator and Receiver have a relationship, and an authorization to debit exists, but there is an error or defect in the payment such that the entry does not conform to the terms of the authorization:

  • The debit Entry is for an incorrect amount
  • The debit Entry was debited earlier than authorized
  • The debit Entry is part of an Incomplete Transaction
  • The debit Entry was improperly reinitiated
  • For ARC, BOC, or POP entries:
    • The source document was ineligible
    • Notice was not provided to the Receiver
    • The amount of the entry was not accurately obtained from the source document

Examples of Correctable Situations

The Rule permits an Originator to correct the underlying error that caused the claim of “error”

Examples of correctable errors include:

  • Debiting on the wrong date
  • Debiting for the wrong amount
  • A debit as part of an Incomplete Transaction
  • Some types of an improperly reinitiated Entry

ODFIs will make the same warranties under Section 2.4 for corrected new Entries as they do for original Entries

  • Conformance with the terms of the original authorization for corrected new Entries is required and enforceable, just as with the warranties for original Entries
  • The warranties for corrected new Entries do not apply to goods and services (Subsection 2.4.3), just as with the warranties for original Entries

Examples of Uncorrectable Situations


The Rule permits an Originator to correct the underlying error that caused the claim of “error”

  • Some errors, though, cannot be corrected. Examples include:
    • The Originator did not provide the required notice for ARC, BOC, or POP entries prior to accepting the check, or the notice did not conform to the requirements of the rules
    • The source document for an ARC, BOC or POP Entry was ineligible for conversion
    • The source document for an ARC, BOC or POP was paid by the RDFI
  • R10 returns remain uncorrectable
    • A new authorization is required in order to Originate new Entries

The Background: Currently, Return Reason Code R10 is a catch-all for various types of underlying return reasons:
  • Wrong date
  • Wrong amount
  • Incomplete transaction
  • Improperly reinitiated transaction
  • Originator not known/recognized
  • Authorization never given
  • Notice not provided

For several of these underlying reasons, there is an actual relationship and a payment authorization between the Originator and the Receiver, but the Originator has made an error regarding the payment. Providing better differentiation among types of unauthorized return reasons will provide ODFI's and Originators clearer and better information when a customer alleges "error" as opposed to "no authorization". Corrective action may be easier in these instances and more significant action can be avoided.

The Impact: All merchants processing ACH transactions

The Timing: Two Phases of Implementation
  • Phase One –Effective date April 1, 2020
    • New definitions of R10 and R11 take effect
    • R11 will be used by FIs for its new purpose
    • R11 is included in Unauthorized Entry Return Rate category and ODFI Return Rate Reporting
    • FIs will receive R11 return information in standard return reporting from their ACH Operator
  • Phase Two –Effective date April 1, 2021
    • R11 covered by the Unauthorized Entry Fee
    • ACH Operators begin billing/crediting for R11s on monthly statements

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