New Business Check Rules Effective Sept. 15
A new amendment to the NACHA Operating Rules provides methods for originators to identify business checks that are ineligible for check conversion, and also provides corporate receivers with methods to opt-out of check conversion. The new Rules become effective on Sept. 15, 2006.
The existing Rules for check conversion allow only consumer checks to be converted. In practice, however, many checks written by businesses are being inadvertently converted because originators cannot distinguish many business checks from consumer checks.
The new Rules provide that checks that contain an auxiliary on-us field in the MICR line are ineligible for conversion. Such checks are typically used by corporate treasury, purchasing and accounts payable departments, and can be readily identified because they are nine inches in length, compared to the standard six inches for consumer checks. Businesses that want to opt-out of check conversion can use check stock that contains the auxiliary on-us field.
The new Rules also provide that checks for more than $25,000 are ineligible for conversion. In practice, virtually all such checks are business checks, and the dollar limit will ensure that checks sent to wholesale lockboxes are not converted.
Finally, the new Rules provide businesses with the same ability as consumers to opt-out of check conversion, and provide RDFIs the same 60-day right of return for unauthorized transactions that exists for consumer check conversions. Under the existing Rules, originators of ARC transactions must have reasonable procedures to allow consumers to opt-out, and this provision will now be available to businesses that do not use checks with auxiliary on-us fields. In addition, the NACHA Operating Rules provide an RDFI with a 60-day right to return an unauthorized ACH debit upon obtaining a written statement from a consumer, and this provision will now apply to ARC and POP transactions to corporate accounts.
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