Virtual Accounts End User Error and Dispute Handling

Sila Inc.
Customer Compliance Manual
On Virtual Accounts End User Error and Dispute Handling

CR-PC-CCM-003, r.0

Definitions

• “Account” means the individual virtual bank deposit account (each with designated American Bankers Association account and routing numbers) of each individual consumer or business End User within the scope of Customer’s MSA Virtual Accounts Services Addendum with Sila.
• “ACH Return” has the meaning assigned to it as a “Return Entry” in NACHA § 8.94.
• “Business Day” means each day, Monday through Friday, except those holidays observed by the Federal Reserve System (see https://www.frbservices.org/about/holiday-schedules). 
• “Customer” means the corporate entity that has a valid and active Master Services Agreement, Order, and MSA Virtual Accounts Services Addendum with Sila.
• “Customer Application” has the meaning assigned to it in Customer’s Master Services Agreement with Sila.
• “Disputed Entry” has the meaning assigned to it under Section 1.B of this Manual.
• “Electronic Signature” means electronic data traceable as a signature or digital imprint that complies with the Electronic Signatures in Global and National Commerce Act, 14 U.S.C. §§ 7001-06.
• “End User” has the meaning assigned to it in Customer’s Master Services Agreement with Sila, but limited only to each End User that has an Account within the meaning of this Manual.
• “Entry” has the meaning assigned to it in NACHA § 8.37.
• “Entry Not in Accordance with Authorization” has the meaning assigned to it under Section 1.A.iii of this Manual.
• “Entry with Revoked Authorization” has the meaning assigned to it under Section 1.A.ii of this Manual.
• “Error” has the meaning assigned to it under Section 1.A of this Manual.
• “ODFI” has the meaning assigned to it in NACHA § 8.67.
• “Operating Hours” means Customer’s hours of operation for responding on the Points of Contact on, minimally, Business Days, for which Customer must keep Sila’s records updated.
• “Originator” has the meaning assigned to it in NACHA § 8.69.
• “Points of Contact” means the phone number, email address, and any other contact medium designated by Customer for purposes of receiving and responding to Errors and Stop Payment Orders under this Manual, for which Customer must keep Sila’s records updated.
• “RDFI” has the meaning assigned to it in NACHA § 8.84.
• “SEC Code” has the meaning assigned to it in NACHA § 8.106.
• “Sila Console” means the secure web interface (at https://www.console.silamoney.com/) designated by Sila to supplement the provision of services and facilitate Customer interaction and compliance.
• “Stop Payment Order” has the meaning assigned to it under Section 3.A of this Manual.
• “Timely Notice” has the meaning assigned to it under Section 1.C.iv of this Manual.
• “Unauthorized Entry” has the meaning assigned to it under Section 1.A.i of this Manual.

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References

• Citations to “NACHA” refer to corresponding articles and sections of the current version of the Operating Rules of the National Automated Clearing House Association (NACHA), as amended, available at https://www.nachaoperatingrulesonline.org/.
• Citations to “Reg E” refer to corresponding sections of Regulation E, promulgated by the Consumer Financial Protection Bureau under the Electronic Fund Transfer Act (15 U.S.C. § 1693 et seq.) and codified at 12 C.F.R. pt. 1005.

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Manual

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1. Errors and Disputes

Customer shall intake, respond to, and resolve Errors (as defined below) in accordance with the following.

A. Errors: An “Error” is the following:¹
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1. A credit or debit Entry to the Account of an individual or business End User that is unauthorized because the Originator did not obtain proper authorization from the End User in accordance with NACHA § 2.3 (an “Unauthorized Entry”).²
2. The Originator of a credit or debit Entry to the End User’s Account obtained a valid authorization from the End User, but the End User revoked the authorization directly with the Originator in accordance with the terms of the authorization before the Originator initiated the Entry, provided that the Entry was not initiated with fraudulent intent by the End User or someone working in concert with the End User (an “Entry with Revoked Authorization”).³
3. The Originator of the debit Entry to the End User’s Account did not submit a credit or debit Entry in accordance with the End User’s authorization to debit the Account in any of the following circumstances (each, an “Entry Not in Accordance with Authorization”):⁴
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       1. An Entry was initiated in a dollar amount that is different from the amount authorized by the End User.
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       2. An Entry was initiated for settlement earlier than the date or time authorized by the End User.
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       3. An Entry is incomplete because an amount of funds equivalent to the Entry amount was deducted from the Account, but the Originator (or the End User’s payee) does not display actual or pending credit for the payment.⁵
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       4. A Reinitiated Entry is improperly initiated because it follows a Returned Entry for the same End User to fulfill the same underlying obligation to the payee but in a dollar amount greater than the value of the Returned Entry (with the inclusion of an additional fee or charge).⁶
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       5. A Reinitiated Entry (or multiple Reinitiation Entries) is improperly initiated because it follows a Returned Entry for the same End User to fulfill a portion of the same underlying obligation to the payee but in a dollar amount less than the value of the original Entry.⁷
4. A debit Entry was processed despite being the subject of a valid Stop Payment Order.
5. A credit or debit Entry to the Account of an individual consumer or business End User that is for a dollar amount or on a date that is different from the amount or date authorized by the End User or is otherwise incorrect (and that is not an Entry Not in Accordance with Authorization).
6. A credit Entry or debit Entry originated by Customer to an external account of an individual or business End User to push funds from or pull funds into the Account of that End User that is for a dollar amount or on a date that is different from the amount or date specified on the written authorization collected by Customer from the End User or is otherwise incorrect.
7. An omission of any credit Entry or debit Entry to the Account of an individual or business End User, or of any credit Entry or debit Entry that is originated by Customer to an external account of the End User to push funds from or pull funds into the Account of the End User, on the End User’s monthly email statement.
8. A computational or bookkeeping error made by any RDFI or ODFI related to any Entry, whether received to the Account of an individual or business End User or originated by Customer to the End User’s external account.
9. An incorrect value in cash was dispensed from an electronic terminal for a draw made by an individual consumer or business End User from the End User’s Account.
10. Sila failed to provide to an individual or business End User positive notice (upon success) or negative notice (upon failure) of the initiation of a recurring Entry or preauthorized (or “subsequent”) Entry pursuant to a standing authorization to the End User’s Account within at least 2 Business Days following the date of the Entry or the date the Entry was supposed to occur.
11. An individual or business End User did not receive a receipt meeting the requirements of Reg E⁸ at the time cash was dispensed from an electronic terminal for a draw made by the End User from the End User’s Account.
12. An individual or business End User did not receive a monthly statement for the End User’s Account meeting the requirements of Reg E⁹ and containing all Entries made to or from the Account, whether originated or received, within the applicable statement period.
13. Customer or Sila failed to provide a readily available phone number for End User support on the Required Disclosure or on the monthly statement of an individual or business End User’s Account.¹⁰
14. An individual or business End User requests an electronic terminal receipt meeting the requirements of Reg E¹¹ for any applicable Entry or for one or more monthly statements for the End User’s Account meeting the requirements of Reg E¹² because the End User did not previously receive one when required.
15. An individual or business End User requests additional information or clarification regarding any Entry or other transaction related to the End User’s Account or seeks to determine otherwise whether any Error exists.

B. Disputed Entries: A “Disputed Entry” is each of the following:¹³
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1. An Unauthorized Entry that is a debit Entry to the Account of an individual consumer End User;
2. An Unauthorized Entry that is an international debit Entry (using SEC Code IAT) to the Account of an individual consumer or business End User;
3. An Entry with Revoked Authorization that is a debit Entry to the Account of an individual consumer End User;
4. An Entry with Revoked Authorization that is an international debit Entry (using SEC Code IAT) to the Account of an individual consumer or business End User; and
5. An Entry Not in Accordance with Authorization that is a debit Entry to the Account of an individual consumer End User.

C. Obligation to Intake Errors: Customer shall perform each of the following functions:
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1. Maintain the Operating Hours and provide written notice to Sila of any change to the Operating Hours, provided that the Operating Hours must provide at least 8 hours of availability per day on Business Days for End User communications and support to allow for the intake of Errors.
2. Maintain operability of the Points of Contact at all times.
3. In a timely fashion during the Operating Hours, capture and process all incoming communications from any End User related to an Error or potential Error, whether received via the Points of Contact or otherwise by phone, email, mail, or any other communication medium available in the Customer Application.
4. Respond to and investigate each notice of Error from an End User in accordance with Section 1.D of this Manual if the notice constitutes “Timely Notice” by meeting the following three conditions:
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       1. Is received from the End User before or within 60 days after delivery on the 5th of each month of the End User’s monthly Account statement to which the Error or potential Error relates (or within 60 days after sending any documentation or clarification to the End User in response to a request specified under Section 1.a.xiii of this Manual);
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       2. Contains information about the End User from which the End User’s name and Account number may be discerned; and
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       3. Indicates why the End User believes an Error exists and includes, if possible, the type, date, and the value or value discrepancy of the Error, if and as applicable.¹⁴
5. If the End User provided the above notice to Customer only by oral communication (such as by phone), then immediately (or shortly thereafter) respond to the End User requiring the End User to send written confirmation of the above notice (such as by email) within 10 calendar days after the oral notice to a Point of Contact or other address explicitly provided by Customer as part of its response.¹⁵

D. Obligation to Investigate & Resolve Errors: Following intake of an Error or potential Error from an End User pursuant to Section 1.C of this Manual, Customer shall perform each of the following functions, as applicable:
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1. Within 1 Business Day: Promptly, but in no event later than on the 1st Business Day following receipt of the End User’s communication,
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       1. Review relevant details to determine the following (gathering additional information or requesting supporting documentation from the End User, as necessary):
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           a. Whether the End User’s communication is Timely Notice;
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           b. Whether the End User’s reported Error or potential Error does constitute or possibly constitutes a Disputed Entry; and
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           c. Whether the End User’s reported Error or potential Error would require initiation of any of the following return codes and, where applicable, the End User’s communication provides for sufficient time to meet the applicable 2-Business Day return window (see Section 2 of this Manual): R08, R17, R22, R23, or R29.
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       2. If receipt of the End User’s communication is Timely Notice that is signed (or similarly authenticated, such as with an Electronic Signature), the reported Error or potential Error does constitute or possibly constitutes a Disputed Entry, and the End User’s communication includes all the minimum required information,¹⁶ then either
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           a. Conclude investigation and resolve the reported Disputed Entry within the 1-Business Day period (including, if necessary, by requesting initiation of an appropriate ACH Return through the Sila Console for the disputed amount in accordance with Section 2 of this Manual) and deliver to the End User a written notice of the resolution, summary explanation of the investigation findings (including whether a Disputed Entry or other Error occurred), and identification of any ACH Return initiated; or
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           b. If unable to conclude investigation and resolve the reported Disputed Entry within the 1-Business Day period, then transfer funds equal to the full amount of the disputed Entry from a pre-funded Sila wallet or account to the End User’s Account and deliver written notice to the End User stating that the reported Disputed Entry is still under investigation, funds are being temporarily re-credited to the End User’s Account pending conclusion of the investigation within 45 Business Days of the End User’s initial report, and that the temporary credit will be withdrawn upon resolution.
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       3. If receipt of the End User’s communication is Timely Notice of an Error or potential Error that does not constitute a Disputed Entry, then reply to the End User, in writing, confirming receipt of the End User’s notice and informing the End User either of the resolution or whether Customer needs additional time (and roughly how much time) to investigate the reported Error or potential Error and come to a resolution.
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       4. If the End User’s reported Error or potential Error would require initiation of any return codes specified above (R08, R17, R22, R23, or R29) and, where applicable, the End User’s communication provides for sufficient time to meet the applicable 2-Business Day return window, then request initiation of a return using the relevant return code (in accordance with Section 2 of this Manual) and send written confirmation of the End User’s communication and resolution of the End User’s reported Error.
2. Within 10 Business Days: In no event later than on the 10th Business Day¹⁷ following receipt of the End User’s communication that is Timely Notice of an Error or potential Error that does not constitute a Disputed Entry, either
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       1. Conclude investigation and resolve the reported Error or potential Error within the 10-Business Day period (including, if necessary, by requesting initiation of an appropriate ACH Return through the Sila Console for the disputed amount in accordance with Section 2 of this Manual) and, within 3 Business Days after concluding the investigation, deliver to the End User a written notice of the resolution, summary explanation of the investigation findings (including whether an Error occurred), and identification of any ACH Return initiated.
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       2. If unable to conclude investigation of and resolve the reported Error or potential Error within the 10-Business Day Period, then transfer funds equal to the amount of the alleged Error, if any, from a pre-funded Sila wallet or account to the End User’s Account and deliver (within 2 Business Days of the provision of credit) written notice to the End User stating that the reported Error is still under investigation, funds are being temporarily re-credited to the End User’s Account pending conclusion of the investigation within 45 Business Days¹⁸ of the End User’s initial report, and that the temporary credit will be withdrawn upon Error resolution.¹⁹
3. Within 45 Business Days: In no event later than on the 45th Business Day²⁰ following receipt of the End User’s communication that is Timely Notice of any Error or potential Error (including any Disputed Entry), conclusion of the investigation into which was extended by written notice to the End User (or for which the End User was awarded a provisional credit),
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       1. Conclude investigation and resolve the reported Error or potential Error within the 45-Business Day period (including, if necessary, by requesting initiation of an appropriate ACH Return through the Sila Console for the disputed amount in accordance with Section 2 of this Manual); and
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       2. Within 3 Business Days after concluding the investigation, deliver to the End User a written notice of the resolution, summary explanation of the investigation findings (including whether an Error occurred), identification of any ACH Return initiated, and, if provisional credit was provided to the End User, the date and time the provisional credit will be debited from the End User’s Account.

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2. ACH Returns

Using the Sila Console, Customer shall request initiation of ACH Returns when the specified conditions are met with respect to any corresponding Entry, according to the following table.²¹ When submitting requests for ACH Returns through the Sila Console, Customer shall select the appropriate transaction and appropriate return code, describe the return reason, upload copies of all written communications from and correspondence with the applicable End User, and upload copies of any additional supporting documentation to allow Sila to process the request within the required timelines specified below.

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3. Stopped Payments

Customer shall intake, respond to, and honor Stop Payment Orders (as defined below) in accordance with the following.

A. Stopped Payment Orders: A “Stop Payment Order” is a verbal or written request received from an End User to block or return any specific forthcoming debit Entry (i.e., from a specified Originator) that is any of the following:²²
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1. A recurring Entry to a consumer Account for which the Stop Payment Order was received at least 3 calendar days in advance of the scheduled recurring Entry;
2. A single Entry IAT, PPD, TEL, or WEB Entry to a consumer Account for which the Stop Payment Order was received within reasonable time for Customer to act on it;
3. A preauthorized (or “subsequent”) Entry initiated pursuant to the End User’s standing authorization to a consumer or business Account for which the Stop Payment Order was received within reasonable time for Customer to act on it; or
4. 4. An ARC, BOC, or POP Entry to a consumer or business Account for which the Stop Payment Order was received within reasonable time for Customer to act on it.‍

B. Obligation to Intake and Process Orders: Customer shall perform each of the following functions:
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1. Intake and identify Stop Payment Orders via the Points of Contact.
2. Promptly, but in no event later than on the 1st Business Day following receipt of the End User’s communication constituting a Stop Payment Order,
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       1. Respond to the End User (in writing, if End User’s communication was in writing, or, orally, if the End User’s communication was oral), requesting any additional required information, as outlined below, and notifying the End User that best efforts are being assumed to honor the Stop Payment Order;
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       2. If the End User’s Stop Payment Order was delivered tonly by oral communication (such as by phone), then immediately (or shortly thereafter) respond to the End User with oral notice to send written confirmation of the Stop Payment Order (such as by email) within 14 calendar days after the oral communication to a Point of Contact or other address explicitly provided by Customer as part of its response;²³
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       3. Gather all the following required information from the End User (or via the Sila API) and request to honor the End User’s Stop Payment Order by submitting this information via the Sila Console (along with copies of all written communications from and correspondence with the applicable End User and any additional supporting documentation):
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           a. Identification of the End User by first and last name and user handle,
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           b. Identification of the Originator of the forthcoming Entry or Entries,
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           c. Identification of the purpose and value or values of the End User’s authorized transaction corresponding to the forthcoming Entry or Entries,
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           d. Identification of any previous Entries from the relevant Originator, whether single or recurring,
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           e. Identification of the one of four possible applicable Stop Payment Order types listed in Section 3.A of this Manual, including whether the Stop Payment Order covers one or multiple Entries, and
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            f. If the End User is requesting to stop all future payments related to a specific authorization involving a specific Originator, then the End User’s written confirmation that the End User had revoked that specific authorization given to that Originator;²⁴ and
3. Intake, identify, and process requests from End Users (using the Points of Contact) to withdraw any Stop Payment Order²⁵ by, using the Sila Console, selecting the applicable Stop Payment Order displayed on the Console interface, and submit copies of the End User’s written request (or written confirmation of an oral request) to withdraw that Stop Payment Order.

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¹ Reg E § 1005.11(a)(1). An “Error” does not include any of the following: (a) a routine inquiry about an individual or business End User’s Account balance; (b) a request for information for tax or other recordkeeping purposes; or (c) a request for duplicate copies of any documentation. Reg E § 1005.11(a)(2).^‍

² Proper authorization under NACHA § 2.3 requires the Originator to have collected the End User’s signature (or Electronic Signature) explicitly authorizing the debit Entry and including each of the following written details: (a) whether the authorization is for a single Entry, recurring Entries, or for subsequent Entries according to the terms of a standing authorization; (b) the dollar value of the Entry (or at least reference to the method for determining the dollar value of the Entry); (c) timing (including the start date), number, and frequency of any recurring Entries or subsequent Entries pursuant to a standing authorization, if and as applicable; (d) the End User’s name or easily discernible identity; (e) identification of the Account, which is to be debited; (f) date of the End User’s authorization; and (g) instructions to the End User of how to revoke the authorization directly with the Originator. NACHA § 2.3.2.2.

³ NACHA § 3.12.1(d).

⁴ NACHA §§ 3.12(a), 3.12.2. 5 NACHA § 3.12.2.2.

⁶ NACHA § 3.12.2.3(a).

⁷ NACHA § 3.12.2.3(b).

⁸ An electronic terminal receipt meets the requirements of Reg E if it contains the following information: (a) the dollar amount of the withdrawal, including any transaction fee; (b) disclosure of a transaction fee, if charged; (c) the date of the withdrawal; (d) the type of electronic funds transfer and type of Account; (e) a minimum 4-digit number or code that identifies the End User’s Account or Accounts; (f) identification of the address or easily discernible location of the electronic terminal; and (g) the name of any third party to or from whom funds were transferred to complete the terminal transaction, if applicable. Reg E § 1005.9(a).

⁹ An Account monthly statement meets the requirements of Reg E if it contains the following information: (a) the account number of the Account; (b) all transaction information, including the amount of each Entry or other transfer, the date credited to or debited from the Account, the type of Entry or transfer, the type of account to or from which funds were transferred, identification of the electronic terminal (if and as applicable), and the name of any third party to or from whom funds were transferred; (c) the amount of any fees assessed against the Account during the applicable statement period; (d) account balances of the Account or Accounts; and (e) Customer’s End User support phone number and address for purposes of Disputed Entries and Errors. Reg E § 1005.9(b).

¹⁰ See Reg E § 1005.10(a).

¹¹ See n.3 for the elements of proper electronic terminal receipts under Reg E § 1005.9(a).

¹² See n.4 for the elements of proper monthly statements for the Account under Reg E § 1005.9(b).

¹³ NACHA § 3.12(a)-(c).

¹⁴ Reg E §§ 1005.11(b)(1), 1005.11(b)(3).

¹⁵ Reg E § 1005.11(b)(2).

¹⁶ The following is the minimum required information for an End User’s communication regarding a Disputed Entry: (a) End User’s printed name and signature; (b) End User’s account number; (c) identification of the transaction originator or payee debiting the Account, both as indicated to the End User (i.e., in the End User’s account or on a monthly statement) and, if different, identification of the intended third-party payee; (d) date the Entry was posted to the Account; (e) dollar amount of Entry; (f) reason for return (i.e., unauthorized, not in accordance with authorization, revoked authorization); (f) specific request for a credit for the amount of the Entry pending the return; (g) signature date of the written statement; (h) assertion by the End User that the Written Statement is true and complete; and (i) assertion by the End User that the End User (or its authorized representative) is the authorized signer or has the authority to act on the Account. NACHA § 3.12.4.

¹⁷ Customer may take up to 20 days from the End User’s communication to provide provisional credit only if the applicable Error involves a new account (less than 30 days old as of the date of the End User’s communication), point-of-sale transaction, or transaction initiated from outside the U.S. Reg E § 1005.11(c)(3).

¹⁸ Customer may take up to 60 days from the End User’s communication to investigate and resolve the Error only if the applicable Error involves a new account (less than 30 days old as of the date of the End User’s communication), point-of-sale transaction, or transaction initiated from outside the U.S. Reg E § 1005.11(d)(1).

¹⁹ Reg E §§ 1005.11(c)(1), 1005.11(c)(2).

²⁰ Customer may take up to 60 days from the End User’s communication to investigate and resolve the Error only if the applicable Error is not a Disputed Entry but involves a new account (less than 30 days old as of the date of the End User’s communication), point-of-sale transaction, or transaction initiated from outside the U.S. Reg E § 1005.11(d)(1).

²¹ Table is derivative of NACHA Appx. Four, pt. 4.2, Table of Return Reason Codes.

²² NACHA §§ 3.7.1.1-2

²³ NACHA § 3.7.1.3

²⁴ NACHA § 3.7.1.3

²⁵ NACHA § 3.7.1.4(a)