Nacha’s Account Validation Rule: A Push for Stronger Anti-Fraud Solutions

Compliance
White Paper

A rapid growth in the volume of ACH payments, especially during COVID, is creating unprecedented opportunities for fraud. Nacha’s WEB Debits Account Validation Rule, which went into effect on March 19, 2021, was intended to reduce fraud, requiring payment originators to validate customer accounts prior to the first debit. Many payment originators, who use the ACH network to transact with customers, are ill-equipped to comply with the new rule if they continue to employ their outdated fraudulent transaction detection methods.

GIACT’s new report, Nacha’s Account Validation Rule: A Push for Stronger Anti-Fraud Solutions, details the potential challenges facing WEB debit payment originators as the new Nacha ruling requiring proper account validation became effective on March 19, 2021.  The report explores the accelerated shift to electronic payments in 2020, specifically through the ACH network. It also discusses how many payment originators will need stronger anti-fraud solutions to comply with a rapidly expanding ACH Network.

The implications of Nacha’s new account validation rule

As Nacha’s new guidelines are now in effect, the need for account validation has never been more urgent. Organizations should consider the overall growth of ACH payments, social distancing, and the advanced shift to digitize payments.


What You’ll Learn

  • Nacha’s new Account Validation rule is part of a long-term strategy to modernize the ACH system to meet the demands of faster payments;
  • A sharp increase in WEB Debits can lead to a rise in fraud, including unauthorized and administrative returns;
  • Traditional validation methods for WEB debits now pose potential compliance risks as payment Originators may not be equipped to effectively validate accounts prior to a debit; and
  • Proactive and persistent solutions can streamline the account validation process, mitigate risk, comply with the new Nacha rule, and reduce fines and fraud losses.

Download the Report

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