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CUNA Regulatory Comment Call

April 25, 2002

EXECUTIVE SUMMARY

The Department of Treasury (Treasury) has issued an interim final rule that governs the use of the automated clearing house (ACH) system by federal agencies. This interim final rule covers four topics: 1) affidavit and electronic communication issues; 2) reintiation; 3) electronic authorization; and 4) electronic terminals. Treasury is revising this rule to incorporate recent changes made to the NACHA Operating Rules (Rules) by NACHA- The Electronic Payments Association. The interim final rule is effective on May 13, 2002 and comments on this interim rule are due to Treasury by June 10, 2002. The interim rule will make the following changes:

• The interim rule will allow any affidavit required by ACH rules to be obtained and retained in an electronic form. In addition, the interim rule will clarify that the affidavit must be a "written statement under penalty of perjury," but does not have to be notarized.
• The interim rule will facilitate the use of electronic agreements and electronic storage of records in conformance with the Electronic Signatures in Global and National Commerce Act (E-Sign Act). This rule will allow any agreement, authorization, affidavit or other record required by the Rules to be executed in an electronic form. The term record includes notices, disclosures, and other forms that must be provided under the Rules.
• The interim rule will limit the number of times that an ACH item may be reinitiated after it has been returned because the account has insufficient or uncollected funds. The limit will be a maximum of three times total for all presentments. Certain ACH items, including the RCK and PPD Accounts Receivable entries, already limit the number of times the item may be presented to three. This ruling would extend that limit to all standard entry class codes, except RCK, which has its own distinct limit of three total presentments.
• The interim rule validates as authorization any electronic signature that complies with the recently enacted E-Sign Act. This change is consistent with Regulation E, which was amended to comply with the E-Sign Act. It allows an electronic authorization to be authenticated by the consumer through a process that establishes the consumer's identity and his or her agreement to authorize the transaction.
• In addition, the interim rule requires that the city and state of a terminal used to initiate a point-of-purchase (POP) electronic check payment be included on the consumer's receipt and printed on the consumer's monthly account statement. This requirement also conforms with recent changes to Regulation E. This change requires agencies to include the terminal’s city and state on the receipt, and it requires credit unions to provide that information to their member’s account statement.
• This rule affects credit unions because most credit unions receive ACH items to their members’ accounts. If a member buys a service or good from a federal agency using ACH, then Treasury’s ACH rules apply and not the NACHA Operating Rules.

If you have questions, please contact Associate General Counsel Mary Dunn by e-mail at mdunn@cuna.com or by telephone at (202) 638-5777 or contact Assistant General Counsel Michelle Profit by e-mail at mprofit@cuna.com or by telephone at (202) 638-5777. You may obtain a copy of this interim rule by clicking here.