A single entry (one-time) debit to a consumer Receiver’s account, initiated pursuant to an authorization that was obtained from the Receiver orally via the telephone.
Originators may use TEL entries only when the following criteria have been met:
There must be an existing relationship between the Originator and the consumer. That is, there must be a written agreement in place between the Originator and the consumer for the provision of goods or services (for example, when the consumer has an insurance policy with the Originator), or the consumer must have purchased goods or services from the Originator within the past two years.
When no relationship exists between the Originator and the consumer, the consumer must be the one to place the telephone call to the Originator.
TEL entries may not be used in circumstances where:
No relationship exists between the Originator and the consumer, and the Originator has initiated the telephone call (i.e., the Originator has “cold-called” the consumer). In such cases, the Originator must provide the consumer with a written authorization that is signed or similarly authenticated and initiate a PPD or a WEB entry.
There is a standing authorization provided by the consumer to the Originator for the transmission of multiple but non-recurring ACH debit entries to the consumer’s account, as in the example when the consumer has provided a written authorization to his brokerage firm to debit the consumer for occasional securities purchases. While the written authorization may contain language permitting the initiation of a debit via a telephone instruction, this type of entry must be transmitted as a PPD debit.
Companies are required to employ commercially reasonable authentication methods to verify the identity of the consumer.
Companies need to establish a method to verify the consumer’s name, address and telephone number.
The company must obtain verbal authorization from the consumer prior to initiating a TEL debit to the consumer’s account.
The authorization must be readily identifiable as an ACH debit transaction, as well as conspicuously state the terms of the transaction, including:
The date on or after which the consumer’s bank account will be debited
The dollar amount of the debit
The consumer’s name
The company’s customer service telephone number
The date of the consumer’s authorization
The consumer must unambiguously express consent to the terms of the authorization
The company must either tape record the consumer’s oral authorization or provide a written notice confirming the terms of the authorization prior to the Settlement Date of the entry.
The company is required to store an original recording or a copy of the authorization for two years from the date of authorization, and be able to produce a copy within 10 banking days upon request.
For a recurring Entry authorized by the Receiver orally, the Originator must (a) comply with the requirements of Regulation E for the authorization of preauthorized transfers, including the requirement to send a copy of the authorization to the Receiver, and (b) retain for two years from the termination or revocation of the authorization (i) the original or a duplicate audio recording of the Oral Authorization, and (ii) evidence that a copy of the authorization was provided to the Receiver in compliance with Regulation E.
Responsibilities of Originators
As an Originator, it's crucial to understand and fulfill your responsibilities when initiating TEL entries. To ensure compliance with the rules and regulations governing TEL transactions, follow these key steps:
Authorization: Obtain proper authorization from the Receiver before initiating TEL entries. For Oral Authorizations obtained via a telephone call, ensure that the authorization process includes providing a telephone number for inquiries that is answered during normal business hours.
Identity Verification: Establish a commercially reasonable process to confirm that your clients have established and implemented procedures to verify the identity of the Receiver. Additionally, ensure that the routing number used in the TEL Entry is valid.
Prompt Response to RDFI Requests: When the RDFI (Receiving Depository Financial Institution) submits a written request for proof of authorization, provide either the recorded telephone conversation with the consumer or the written notice that was provided to the consumer within ten Banking Days of receiving the request. This must be done if the request is received within two years of the Settlement Date of the TEL Entry.