Mixed Deck — All AAP Topics Flashcards

Stop payment requests from consumers regarding ACH debits must be honored by the RDFI if received:

Answer: In time to allow a reasonable opportunity to act before the scheduled debit

Under Regulation E and NACHA rules, the RDFI must honor a stop payment request if it is received in time for the institution to have a reasonable opportunity to act on it.

Return code R07 indicates:

Answer: Authorization revoked by the Receiver

R07 (Authorization Revoked by Consumer) is used when a consumer has revoked a previously granted authorization for recurring debits.

NOC change code C01 indicates:

Answer: Incorrect DFI account number

C01 is the change code used in a Notification of Change to indicate that the DFI account number in the entry is incorrect and needs to be updated.

When must an ODFI suspend an Originator's ACH origination privileges?

Answer: When the ODFI determines the Originator has materially breached the origination agreement or NACHA rules

An ODFI must suspend an Originator that has materially breached the ACH origination agreement or the NACHA Operating Rules to protect the network and limit the ODFI's liability.

A consumer's written authorization for a recurring ACH debit must include which essential element?

Answer: The Receiver's signature or electronic equivalent authorizing the debit

An authorization for recurring ACH debits must be signed or agreed to by the consumer (Receiver) using a written signature or its electronic equivalent.

For which of the following return codes is a Written Statement of Unauthorized Debit not required?

Answer: R-38

For the return code R-38 (Stop Payment on Source Document), a Written Statement of Unauthorized Debit (WSUD) is not required. A WSUD is typically needed for unauthorized transactions where the consumer claims they did not authorize the debit. However, for an R-38, the consumer has already initiated a stop payment, which serves as sufficient notification to the financial institution.

A consumer may revoke ACH debit authorization by:

Answer: Notifying the Originator in the manner specified in the authorization agreement

To revoke an ACH debit authorization, the consumer must notify the Originator in the method described in the authorization agreement itself.

How many characters are in each record of a standard NACHA-formatted ACH file?

Answer: 94

All ACH records — regardless of type — are exactly 94 characters in length, as required by the NACHA Operating Rules file format specification.

An ODFI's warranty to the ACH network when transmitting entries includes:

Answer: That entries comply with NACHA Operating Rules and that the Originator has obtained proper authorization

By transmitting entries, the ODFI warrants that they comply with NACHA Operating Rules and that proper Receiver authorizations have been obtained.

Risk management program goals are typically divided into two categories: pre-loss goals and post-loss goals. Which one of the following describes one of these categories of goals? Choose one answer.

Answer: Post-loss goals broadly describe the degree of recovery that an organization will strive to reach following a loss.

Risk management goals are typically categorized into pre-loss and post-loss objectives. Post-loss goals specifically define the desired state of an organization after a loss event has occurred. These goals aim to guide the recovery process, ensuring the organization can survive, maintain operations, and achieve a certain level of stability and normalcy following an adverse incident.

For ARC entries, the notice posted by the Originator at the point of check collection must be:

Answer: Clear and conspicuous, informing consumers that their check will be converted to an ACH debit

For ARC, NACHA requires a clear and conspicuous notice at the collection point (e.g., billing statement or return envelope) that checks may be converted to ACH debits.

For PPD debit entries, the written authorization obtained by an Originator must be:

Answer: Clear, readily understandable, and contain the payment amount, schedule, and Receiver's account information

NACHA rules require that PPD debit authorizations be clear, readily understandable, and include key terms such as the payment amount, frequency, and start date.

Which return code is used when the RDFI cannot identify or locate the account referenced in the entry?

Answer: R03 (No Account/Unable to Locate Account)

R03 (No Account/Unable to Locate Account) is used when the account number cannot be matched to any existing account at the RDFI.

Which addenda record type is required for IAT entries?

Answer: Multiple mandatory addenda records including remittance, foreign correspondent bank, and beneficiary information

IAT entries require multiple mandatory addenda records that carry detailed information about the foreign financial institution, originator, receiver, and remittance data.

International ACH Transactions (IAT) require the Originator to include in mandatory addenda:

Answer: Details about the foreign financial institution and cross-border payment information

IAT entries require multiple mandatory addenda records containing detailed information about the originating and receiving financial institutions and cross-border payment details.

Under NACHA rules, a Third-Party Sender's compliance obligation includes:

Answer: Entering into a written agreement with the ODFI acknowledging its responsibilities under NACHA Operating Rules

NACHA requires each Third-Party Sender to have a written agreement with its sponsoring ODFI that explicitly acknowledges the TPS's obligations to comply with NACHA Operating Rules.

Which party initiates a reversing entry in the ACH network?

Answer: The Originator through its ODFI

Only the Originator, through its ODFI, may initiate a reversing entry to correct an erroneous entry that was already transmitted.

According to Reg E, a financial institution must provide notification to a consumer within ___ day(s) of preauthorized transfer.

Answer: 2 business days

According to Regulation E, financial institutions must provide notification to a consumer within two business days of a preauthorized transfer. This rule ensures consumers are promptly informed about transactions affecting their accounts. This notification helps consumers monitor their finances and identify any unauthorized activity quickly.

Which field in the ACH File Header Record identifies the entity that created or originated the ACH file?

Answer: Immediate Origin Name

The Immediate Origin Name field (23 characters) in the File Header Record identifies the originating entity — either the ODFI or the company that created the ACH file.

A zero-dollar account verification entry sent before initiating WEB debits is used to:

Answer: Verify that the Receiver's account is open and the account number is valid

Zero-dollar verification entries (a form of prenote for WEB entries) confirm that the routing and account numbers are valid and the account is open before initiating live debit transactions.