NACHA To Require Billers to Provide an ARC Opt out

The National Automated Clearing House Association (NACHA) announced today a change in its rules that will require billers that use NACHA's increasingly popular electronic check conversion service at lockboxes to notify customers they may opt out of the service. The new rule takes effect June 11. It does not specify language or format for the notice, but does require that the notice be made repeatedly. NACHA expects most billers will include it as part of the bill itself. So-called accounts-receivable check conversion (ARC), which NACHA introduced in March 2002, has been one of the organization's fastest-growing forms of electronic check conversion. It allows utility companies, credit card issuers, and other heavy-duty billers to convert checks received in the mail from consumers and aggregated at lockboxes into electronic ACH debits for faster settlement. NACHA estimates 220 million payments, including on-us transactions, were converted via ARC last year. NACHA says it does not expect the new rule, technically an amendment to NACHA's ARC entry rules, to impose a significant burden, since a survey it conducted shows 93% of billers using ARC already include notices to their customers telling them they may opt out of check conversion. NACHA also says that, “in many cases,” fewer than 1% of consumers are choosing to opt out. But the trade organization for the automated clearing house saw a need to introduce the opt-out requirement as a customer-service measure for the minority of consumers who oppose check conversion. “Those that do opt out are very adamant,” says Michael Herd, a NACHA spokesperson. “They may be a small percentage but they have strong beliefs about getting that piece of paper. From the beginning of ARC, there was the presumption that billers would give consumers the option to opt out, and 93% are, but it's not 100%.” Herd says the rule requires repeated notice to consumers but says nothing about language or format. “That's between the biller and the customer,” he says. “Billers are very protective of their billing statement.” Even consumers who opt out, however, may find their checks subject to electronic processing, NACHA points out, beginning Oct. 28 when the Check Clearing for the 21st Century Act takes effect and allows banks to swap images of checks rather than the checks themselves.