Be Prepared for the New Use of Return Reason Code R11

3/16/2020 - By Janice Weisz, AAP

A recently approved amendment to the Nacha Operating Rules will allow financial institutions (FIs) the ability to differentiate between unauthorized return reasons for consumer debits.  

Currently, Return Reason Code R10 is a catch-all for various types of underlying return reasons, including some for which a valid authorization exists (such as a debit on the wrong date or for the wrong amount).  In these cases, the originator and its customer (the receiver) might benefit from the error being corrected, rather than the authorization being terminated outright.   

The new Rule repurposes Return Reason Code R11, with a description of “Customer Advises Entry Not In Accordance with the Terms of the Authorization.”  Effective April 1, 2020, FIs will use R11 to return a debit that was authorized by the receiver, but some type of error occurred (i.e., wrong date, wrong amount, debited but not credited, etc.).  

FIs will continue to use R10 when the receiver claims he or she does not know the originator, does not have a relationship with the originator, or did not give authorization for the entry.  The new R10 description will be “Customer Advises Originator is Not Known to Receiver and/or Is Not Authorized by Receiver to Debit Receiver’s Account.”  

The new R11 code will be similar to the R10 code.  A key difference between R10 and R11 will be that an originator will be permitted to correct the underlying error of an R11 return, if possible, and submit a new entry without being required to obtain a new authorization.

Effective Dates

The Rule becomes effective in two phases.  Effective April 1, 2020, RDFIs will begin using the R11 code for its new purpose; ODFI Return Rate Reporting obligations will apply.  A year later, on April 1, 2021, the R11 code will become covered by the existing Unauthorized Entry Fee.   


RDFIs need to educate their staff on the proper use of the R10 and R11 codes, as well as update their systems to change the R11 return time frame to the 60-day window and the new return entry description.  RDFIs should review their Written Statements of Unauthorized Debit to determine if any revisions are appropriate to facilitate the updated use of these return codes.

ODFIs, Third-Party Senders, and Third-Party Service Providers

These participants need to educate their staff and Originators on the changes to the R10 and R11 codes.  Where necessary, these participants need to update their systems to accommodate the re-purposing of R11, including modifications to return reporting and tracking capabilities.


Originators need to be aware of the differences between returns bearing the R10 and R11 codes and modify their procedures accordingly. 

For more information, you can visit Nacha’s website.

Staying in compliance can be challenging if you have any questions or need assistance preparing for this new Nacha Rule, email me or a member of our Financial Institutions Team so we can help. 

About the Author | Janice Weisz, AAP
Janice is a consultant in the Financial Institution Advisory Group at Saltmarsh, Cleaveland & Gund. Janice has been working with financial institutions since 2001 with an emphasis on operations, compliance, audit and internal controls. She currently provides ACH compliance, NACHA compliance, internal audit and other consulting services to the firm’s financial institution industry clients. Connect with Janice on LinkedIn.

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