If a consumer transaction (ACH Types: PPD, TEL, WEB) is returned with an ACH Chargeback Code (R05, R07, R10), it means that the consumer has presented a signed statement (or the electronic equivalent) to the bank stating that one or more of the following is the case:
The transaction was never authorized by the account holder or authorization was revoked;
The transaction was processed on a date earlier than authorized; or
The transaction is for an amount different
than authorized.
NOTE: The transaction must be for the
exact amount authorized—it cannot be higher or lower.
For a business transaction using the CCD ACH Type (against a business checking account), ACH Chargeback code R29 is used if the account itself is not enabled for ACH Transactions, or if the account holder notifies the bank that the transaction was not authorized.
As part of the ACH Chargeback process, your customer’s bank will place a block on the account so that any further attempts by your company to debit that bank account will be rejected. Your customer must contact the bank to remove the block, and you should not attempt to process any further transactions against that account until you have confirmed that the block has been removed, and you have notified your service provider that the block has been removed.
Unfortunately, there is no dispute resolution available to you within the ACH Network. If your customer continues to claim the transaction was not authorized, but you have proof that it was properly authorized, you will need to sue your customer in Small Claims Court to collect. If you decide to take this course of action, please contact your service provider to obtain a copy of the statement your customer submitted to the bank—you will need this document to pursue your case.
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Your ACH processor, your bank, and NACHA take unauthorized transactions very seriously. Your account is monitored for chargeback activity, and if such activity becomes excessive your ACH processing privileges may be curtailed or suspended. Your service provider will make every attempt to contact you if your processing capability is in peril and will help you make changes to bring your account back in-line with acceptable chargeback levels. |
The following ACH Return Codes are designated as “unauthorized” Chargebacks. Click the links to view complete details on each of them.
R05 Unauthorized Debit to Consumer Account Using Corporate SEC Code
R10 Customer Advises Unauthorized, Improper, Ineligible, or part of an Incomplete Transaction
Next Section: Directory of ACH Return Codes >
