Automated Clearing House (ACH) transfers govern both the rapid disbursement and scheduled repayment of short-term online loans under the regulatory oversight of NACHA and CFPB Regulation E.
1. Consumer Rights Under Electronic Fund Transfer Act (EFTA / Reg E)
- Right to Written Pre-Authorization: Lenders must obtain a signed or electronically confirmed authorization specifying debit amounts and recurring schedules.
- Right to Revoke Authorization: Consumers may revoke ACH debit permission at any time by notifying the lender in writing (providing reasonable notice of 3 business days).
- Bank Stop-Payment Orders: Under Regulation E (§ 1005.10(c)), consumers can instruct their depository bank to stop payment on any pre-authorized electronic debit at least 3 business days before the scheduled transfer.
- NACHA Return Codes: Common return codes include
R01(Insufficient Funds),R07(Authorization Revoked by Customer), andR08(Payment Stopped).