ARLINGTON, Va. – NAFCU told NACHA in a recent comment letter that it basically supports its proposed changes to clean up unauthorized Telephone-Initiated (TEL) Entries. NAFCU President and CEO Fred Becker wrote that it approved much of the proposed requirements, including expanding return entry monitoring to include all Standard Entry Class (SEC) Codes and reduce the rate for unauthorized return entries from 2.5% to 1%. Expanding monitoring to all SEC Codes “will substantially improve the quality of the ACH Network by reducing the number of return entries related to unauthorized transactions,” he wrote. Becker added, “Currently, the rate of unauthorized returns for each SEC code is substantially less than 1%. Given that, NAFCU believes that the existing 2.5% threshold is too high and reducing the threshold for investigation to 1% is reasonable and adequate.” Additionally, in the June 18 comment letter, NAFCU backed the requirement for developing a plan within 30 days to reduce the return rate once it is over 1% within 60 days of submission of the plan. NAFCU did have one objection to the proposal. The proposal provides 60 days from submitting a written plan to bring the level down to 1% before facing a possible fine under the National System of Fines. Because the Receiving Depository Financial Institution has 60 days from settlement to return a consumer ACH transaction as unauthorized, it would be possible that the ODFI could receive unauthorized returns at the previous rate for 60 days. Thus, NAFCU suggested that the time period prior to levying fines should be 120 days and that institutions that have made significant reductions should not be automatically fined but given another 60 days to reach 1%. However, institutions that willfully disregard the initial information request or do not have a plan to reduce their return rate should be reported to the National System of Fines. NACHA also requested comments on whether return monitoring should encompass invalid account numbers, to which NAFCU said, “further study of the reasoning behind the high rate of returns due to invalid account numbers is warranted before such a change should be implemented.” Becker concluded, “NAFCU believes that, overall, credit unions will experience a substantial, positive impact by the proposed rule change.” He added that software changes and costs related to the proposal should be minimal. The implementation date under the proposal is Sept. 10, 2004. [email protected]