If you see an R11 return after April 1, it may not be an April Fools prank! Effective on that date, there will be a new definition of the existing R11 return code. Previously, R11 signified a “Check Truncation Entry” return.

R11 is now defined as Customer Advises Entry Not in Accordance with the Terms of the Authorization. It will now classify as an Unauthorized Return, and there are a couple of characteristics to take note of: It is used by the receiving bank to return an entry for which the Originator (the merchant) and Receiver (the merchant’s customer) do have a relationship, and for which an authorization to debit does exist, but there is an error in the payment such that the entry does not conform to the terms of said authorization: for example, if it is for an incorrect amount or the payment was debited earlier than authorized.  For check-derived ACH entries like ARC, BOC or POP transactions, it may signify that discrepancies may exist with the source document (the check) such as with the amount, or that the Receiver did not get adequate notice, or the source document is ineligible. 

Here at VeriCheck, we are ready to integrate this new use of the R11 return code, and have also worked to make sure that the R11 code is aggregated correctly with the other Unauthorized return codes—R05, R07, R10, R29, and R51—for reporting purposes, for calculation of return rates, and for billing.

For ISOs and merchants, there will be no or minimal change necessary. If you are tracking Unauthorized Returns and rates, for your own risk management or for reconciling to VeriCheck activity, just bear in mind that the R11 code needs to be considered as an Unauthorized return code. As for procedural impact, the rule states that it is not necessary for a merchant to obtain a new authorization from its customer, or any further action. The code does not signify a contention with the authorization itself, only that a particular transaction does not conform to that authorization. For the Originator (the merchant), action can be taken to make corrections to the returned item and create a new entry with the corrections within 60 days of the original settlement date of the returned item.

In short, we all just need to be ready to see the R11 Return Code at an increased frequency and be aware of its new meaning. The VeriCheck team is ready for R11, and, as always, the team is ready to answer your questions or provide assistance in any way we can.