ACH disputes are different from CC Chargeback disputes. While most ACH returns are automatic, not customer initiated, such as insufficient funds or account closed (see more on that here). ACH returns for "unauthorized" reason codes (R05, R07, R10, R29, and R51) are the rough equivalent of disputes, and the bank account holder usually initiates them. The issuing bank will make the final determination wether or not to clawback disputed funds.
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ACH Return Notification
When Propay, our payment processor, is informed of an ACH dispute, you will have received an email from [email protected] with the subject line ACH Return. In this email, you will be provided one of the following reason codes:
Customer advises not authorized; item is ineligible, notice not provided, signatures not genuine, or item altered (adjustment entries)
No account/unable to locate account (typically incorrect account or routing number)
Payment stopped or stop payment on item
Customer advises entry not in accordance with the terms of the authorization.
In RentRedi, the tenant's charge will automatically be updated to reflect the returned payment and include the incurred fee.
ACH Clawback Process
These returned funds will be recouped from your merchant account in one of a few ways:
Deducted from your next deposit (ie: A $750 ACH charge is returned the same day as another tenant's $1000 payment is to be deposited, only $250 will be deposited)
The balance of funds will be withdrawn from your deposit account (ie: A $750 ACH charge is returned the same day as another tenant's $500 payment is to be deposited, $250 will be withdrawn from the deposit account to cover the difference)
The full ACH return amount is deducted from the deposit account, this happens when no other payments were being deposited on that day
In scenarios 2 or 3, you will receive an email from [email protected] with the subject line Withdrawal Initiated for $XXX.XX. You can find the details of any transactions and deposits from your reports in RentRedi. You can also see the return reason code by viewing the notes section of that specific charge.
Contesting a Clawback
These ACH returns cannot be disputed or contested through RentRedi or Propay.
The best way to handle ACH disputes is between the landlord and the tenant. Landlords should work directly with the the tenant to arrange an alternate method of payment for a payer-initiated ACH dispute (a.k.a, reversal, reject, or refusal). Our support team is happy to help you locate any additional documentation you may need in compliance with our processor's policies.