Responding to R10 return

I can’t find any documentation on how to respond to R10 returns (consumer advises not authorized) via Dwolla. As these returns could involve friendly or malicious fraud, there should be a way to respond as a merchant. Since Dwolla owns the bank processing relationship, presumably there’s be a way to do this through Dwolla… any pointers?

Hey @TomK hope your weekend went well.
According to Nacha, the governing body of the ACH network, the R10 return code is defined by:

“Customer Advises Originator is Not Known to Receiver and/or Originator is Not Authorized by Receiver to Debit Receiver’s Account” and used for:
-Receiver does not know the identity of the Originator
-Receiver has no relationship with the Originator
-Receiver has not authorized the Originator to debit the account

In this case, Dwolla will automatically remove the suspected party’s Bank funding source, and change the status of the Customer to `deactivated.

If funds have moved from the source bank account to the destination funding source, Dwolla is required to return the funds to the originator, and we will change the transfer status to failed.
Here’s some dev docs to refer to:
https://developers.dwolla.com/resources/bank-transfer-workflow/transfer-failures.html

If you would like to know about ACH returns and how Dwolla handles them, check out our blog here:

@CoolStoryCory so you’re saying there’s no recourse for fraud or friendly fraud?
In other words, as a consumer i could use pay any service provider using Dwolla, then advise not authorized and the service provider would not be able to do anything?

Ok… Sounds like there’s nothing you can do…

Hi @TomK, Apologies for missing your previous message! You may have recourse, however it would have to be handled outside of the ACH Network. When a consumer/end-user disputes a transaction as unauthorized, they are required by Nacha Rules to complete a Written Statement of Unauthorized Debit (WSUD), which is similar to an affidavit, attesting that the transaction was truly not authorized. You can request a copy of this documentation, and could pursue legal action outside of the ACH Network.

To provide more context:
If the consumer has signed a Written Statement of Unauthorized Debit the RDFI (consumer’s FI) must return the item and the ODFI (Dwolla) must accept the return. That being the case, it’s suggested that when fraud occurs the victim contacts local law enforcement to discuss the circumstances and see what help can be offered. If the victim has legal council they may be a resource to discuss if there are any paths to recourse per your Terms of Service or Contractual Agreement.

Hopefully you find this information helpful. Please let us know if you have any follow up questions and we will work quick to get you a response!