Q.) We have been notified by our account holder that she paid via PayPal for an online order that she never received. The transaction was authorized as an ACH withdrawal from her account rather than a charge to her credit card. Can we return the PPD debit since we were notified within 60 days of settlement date? What return code should we use?
A.) Extended Return Entries are permitted under the Nacha Rules where the RDFI has an obligation to recredit the Receiver (e.g., for an unauthorized debit) and certain requirements are met. Nacha Operating Rules Subsection 3.13 and 3.11. Based on the description of the scenario, it does not appear to involve an obligation to recredit the Receiver and an Extended Return Entry would not be permitted. (Note also that the ACH Rules do not address non-delivery of goods or services so there is not an appropriate return code for the scenario you describe.) Your account holder should contact PayPal, who has a relationship with the seller, or the seller directly, in order to resolve the issue.
The information contained herein has been prepared for general informational purposes only and is not offered as and does not constitute legal advice. You should consult with your legal counsel regarding the legal, regulatory and Nacha Rules requirements that apply to specific ACH transaction scenarios..