Focus on the Tangible to Comply with Nacha’s Credit-Push Fraud Rules

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Being a banker, William Mills knows better than most that managing risk can easily seem "super, super overwhelming." But since throwing your hands up isn't an option, Mills has some been there, done that advice now that a series of new Nacha Rules to fight credit-push fraud are in effect.

With "literally tens of thousands of points of risk," Mills, Vice President, Deposit and ACH Operations at Premier Banks, urged financial institutions to focus. "Find things that are tangible to you to start with. Don't get overwhelmed by everything that could happen. Look back at your history: Where did you lose money? What was something that happened to your clients that caused them damage? How can you address those things?" Mills told Nacha's Payments SmartCast podcast.

"Having a pragmatic, realistic approach to assessing your risk makes the risk management so much easier," added Mills.

The Rules Mills is talking about require all non-Consumer Originators, ODFIs, RDFIs, Third-Party Service Providers, and Third-Party Senders to establish and implement risk-based processes and procedures reasonably intended to identify ACH Entries initiated due to fraud. Jordan Bennett, Nacha Senior Director, ACH Network Risk Management, noted that while the Rules require establishing policies and procedures, "they're not prescriptive, and what may work for your bank is not going to work for another, so it's very much up to the individual bank."

And Bennett said efforts to reduce fraud can't be hamstrung by financial institutions operating in silos.

"I think it's very important for banks to know what to communicate and when to communicate. We're all involved in this together," said Bennett. While acknowledging privacy concerns, Bennett said that shouldn't equate to radio silence.

"There are lots of laws and rules about protecting consumers. There are carveouts on almost all of those about fraud," said Bennett. "Speak to your legal team and know what you can share and with whom you can share it. And then know how to communicate with other party." Key to that, Bennett said, is ensuring your bank or credit union's information is up to date in the ACH Contact Registry on Nacha's Risk Management Portal-which also happens to be a Nacha Rules requirement.

"We know that when fraud happens, the faster we can communicate, the faster we can stop it, the more likelihood there will be for recovery."

Much more was discussed, and you can listen to the complete podcast below.

William Mills recently shared tips for keeping Originators informed about Nacha Rules changes. You can read that blog post here.