Thinking Through A2A Transfer Liability

Have you thoroughly considered the risks of external account-to-account transfers, specifically consumer debit origination? Almost every week ePayResources fields a call from a member ODFI that has been asked to provide proof of authorization (PoA) for a debit entry they allowed a consumer accountholder to send to another institution. Often the ODFI’s accountholder debited someone else’s account for a large sum, and now the accountholder and the funds are gone. 

The ODFI tells us that their accountholder filled out an online banking agreement and used micro-entries or some other account verification product. The problem is that account validation and transaction authorization are not the same thing. Without a valid PoA the ODFI must take the transaction back. 

Click Read More below to see the complete blog article from Barbara Hudgins, AAP, APRP, CCRS, Director, Payments Education.