ACH Rules Violation

Class 1 Rules Violation

A Class 1 Rules Violation involves a recurrence of a previous rules violation. A rules violation is considered to be a recurrence of a previously reported infraction of these rules if:

• the same infraction is committed by the same Originator that transmits through the ODFI within the one-year period following the Resolution Date of the initial rules violation;
• the same infraction is committed by the same Third-Party Service Provider transmitting through or on behalf of an ODFI or receiving on behalf of an RDFI within the one-year period following the Resolution Date of the initial rules violation; or
• the same infraction is committed by the same Participating DFI within the one-year period following the Resolution Date of the initial rules violation.

Fines for recurrences may be assessed by the ACH Rules Enforcement Panel as follows:

• The first recurrence of a rules violation that will cause a fine to be levied by the National Association will result in an assessment of up to $1,000 against the Participating DFI.
• The second recurrence of a rules violation that causes a fine to be levied by the National Association will result in an assessment of up to $2,500 against the Participating DFI.
• The third recurrence of a rules violation that causes a fine to be levied by the National Association will result in an assessment of up to $5,000 against the Participating DFI.

Class 2 Rules Violation

A Class 2 Rules Violation is one in which:

1. the Participating DFI has not responded to either the Notice of Possible ACH Rules Violation or the Notice of Possible Fine;
2. the Participating DFI responds to either notice that it does not intend to correct the rules violation;
3. the Participating DFI
1. fails to respond completely and accurately, within the proper time frame, to the National Association’s request for information in accordance with the requirements of Article Two, section 2.17 (ODFI Reporting Requirements);
2. substantiates the claim that the Originator or Third-Party Sender exceeded the return rate for unauthorized entries and the ODFI has failed to reduce the Originator’s or Third-Party Sender’s return rate for entries returned as unauthorized to a rate below the return threshold for unauthorized entries within sixty (60) days of receipt of the National Association’s written request; or
3. substantiates that the Originator’s or Third-Party Sender’s return rate for unauthorized entries exceeded the return rate, and the ODFI successfully reduced the return rate to below the return threshold within the 60-day time period, but the ODFI failed to maintain the return rate below the return threshold for 180 additional days. The Panel may consider the Originator’s or Third-Party Sender’s volume of debit entries as an extenuating circumstance in determining whether a violation under this provision constitutes a Class 2 Rules Violation.
4. the ACH Rules Enforcement Panel determines the time frame and Resolution Date asserted by a Participating DFI as necessary to resolve the problem causing the rules violation are excessive;
5. the National Association believes that the violation causes excessive harm to one or more Participating DFIs or the ACH Network; or
6. it is the fourth or subsequent recurrence of the same rules violation.

In situations involving a Class 2 Rules Violation, the ACH Rules Enforcement Panel may levy a fine against the respondent Participating DFI in an amount up to $100,000 per month until the problem is resolved. Where the violation relates to a specific Originator or Third-Party Service Provider at the DFI, a separate monthly fine may be assessed to the DFI with respect to each such Originator or Third-Party Service Provider.

Class 3 Rules Violation

In any case where a Class 2 Rules Violation, as defined by subsection 11.3.7.4 (Class 2 Rules Violation), has continued for three consecutive months, the ACH Rules Enforcement Panel may determine that the violation of these rules by a respondent Participating DFI is a Class 3 Rules Violation and may levy a fine against the respondent Participating DFI of up to $500,000 per month until the problem causing the violation is resolved.

Suspension

In circumstances where the ACH Rules Enforcement Panel has determined that there is a Class 3 Rules Violation that relates to a specific Originator or Third-Party Sender pursuant to subsection 11.3.7.5 (Class 3 Rules Violation) of this Appendix Eleven, the ACH Rules Enforcement Panel may direct the ODFI to suspend the Originator or Third-Party Sender from originating. Any such suspension shall only be lifted by the ACH Rules Enforcement Panel.

In cases where the ACH Rules Enforcement Panel has directed an ODFI to suspend an Originator or Third-Party Sender from originating, the National Association will provide notice of such suspension, and any subsequent reinstatement, to Participating DFIs, ACH Operators, and Regional Payments Associations.