ACH Stop Payment vs WSUD Revocation Rules and Dispute Evidence

Few banking scenarios create more immediate anxiety than watching funds leave an account via Automated Clearing House (ACH) for a bill that was supposed to be cancelled. In Colorado, as in the rest of the banking system, consumers often find themselves trapped between a merchant who ignores cancellation requests and a bank demanding specific proof to stop the bleeding. The confusion typically stems from the critical difference between stopping a future payment and reversing one that has already cleared.

The success of an ACH dispute often hinges on precise timing and specific terminology. Using the wrong mechanism—such as requesting a “stop payment” on a charge that has already settled, or claiming “fraud” for a subscription you simply forgot to cancel—can lead to immediate denial of the claim. Banks operate under strict regulatory frameworks that require the consumer to establish exactly when authorization was revoked.

This guide clarifies the operational workflow for Colorado consumers facing unauthorized ACH debits. It details the necessary distinction between a Stop Payment Order and a Written Statement of Unauthorized Debit (WSUD), the evidence required to substantiate a claim under Regulation E, and the specific timelines that dictate whether funds are recoverable or lost permanently.

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Last updated: October 26, 2023.

Quick definition: A formal banking process to either block a specific future ACH transfer (Stop Payment) or reverse a posted transaction (WSUD) based on lack of valid authorization.

Who it applies to: Consumers holding checking or savings accounts in Colorado who see unauthorized debits, errors in amount, or charges after a subscription cancellation.

Time, cost, and documents:

• Stop Payment Fee: Typically $25 to $35 per request (varies by bank).
• WSUD Fee: Generally $0, as it is a dispute of an unauthorized error under Reg E.
• Critical Window: Notification to the bank must occur within 60 days of the statement transmittal.
• Documents: Copy of cancellation email to merchant, Written Statement of Unauthorized Debit (bank form).

Key takeaways that usually decide disputes:

• The distinction between “Not Authorized” (fraud) and “Authorization Revoked” (subscription dispute).
• The presence of a timestamped cancellation request sent to the merchant.
• Signing the WSUD form under penalty of perjury.
• Matching the exact dollar amount for stop payment orders (even a penny difference can let a charge through).

Quick guide to ACH disputes

• Stop Payment Order: Use this before the money leaves. It acts as a filter. You provide the merchant name and exact amount. It is temporary (often 6 months).
• WSUD (Written Statement of Unauthorized Debit): Use this after the money has left. It is a sworn statement telling the bank the transaction violated the authorization terms.
• The “Three Business Days” Rule: To stop a pre-authorized transfer, you generally must notify the bank at least three business days before the scheduled transfer.
• Verbal Limits: A phone call to stop payment is binding for only 14 days unless you sign a written confirmation. If you forget to sign, the block drops.
• Merchant Responsibility: Blocking the payment at the bank does not cancel your contract with the merchant. You may still owe the money civilly even if the bank stops the transfer.

Understanding ACH protections in practice

The core of ACH protection lies in the concept of “Authorization.” When you sign up for a gym, a utility bill, or a subscription box, you grant authorization for them to pull funds. To successfully dispute a charge later, you must demonstrate that this authorization was formally effectively revoked. Banks distinguish heavily between “I never gave permission” (R10 code – Fraud) and “I gave permission but took it back” (R07 code – Revocation).

In a typical Colorado banking dispute, the consumer fails when they try to use a fraud claim for a billing dispute. If a consumer claims a transaction was unauthorized fraud, but the bank sees a history of 12 previous authorized payments to the same merchant, the bank will likely deny the claim unless the consumer produces proof of cancellation. The burden of proof shifts from the bank to the consumer to show that the relationship was terminated prior to the charge.

Furthermore, the Stop Payment mechanism is technically fragile. It relies on matching specific data points—usually the exact amount and the merchant’s identifier. If a merchant changes their billing descriptor slightly or changes the amount by a few cents (common in utility bills), the Stop Payment filter may miss the transaction entirely.

Legal and practical angles that change the outcome

While federal Regulation E sets the floor for consumer protections, bank policies often define the friction of the process. Some institutions allow digital signing of the WSUD via a secure portal, while others require a wet ink signature physically mailed or brought to a branch. In rural Colorado areas, this physical requirement can delay the process, causing consumers to miss deadlines.

The “Reasonableness” of the consumer’s actions is also scrutinized. If a consumer notices an unauthorized recurring charge in January but waits until June to report it, the bank is generally only liable for the charges in the first 60-day window. The subsequent charges are the consumer’s liability because they failed to review their statements, establishing a pattern of negligence under the law.

Workable paths parties actually use to resolve this

Most successful resolutions follow a specific escalation path. The consumer first contacts the merchant to document the error. If the merchant refuses a refund or remains unresponsive, the consumer approaches the bank with that refusal as evidence. This “good faith attempt” to resolve with the merchant is often a required field on bank dispute forms.

Practical application of ACH recovery in real cases

Navigating the dispute department requires treating the banking file like a court case. The bank employee reviewing the claim is looking for boxes to check to comply with NACHA operating rules. Providing a clean, chronological narrative helps them verify the “Unauthorized” status quickly.

1. Cancel the service immediately: Send an email or use the merchant’s portal. Screenshot the confirmation page or save the sent email. This is your “Revocation Date.”
2. Identify the unauthorized charge: Note the specific date, amount, and merchant descriptor on your bank statement.
3. Contact the bank within 2 business days: Reporting quickly minimizes your liability (often capping it at $50). Waiting longer increases liability to $500 or unlimited.
4. Request the specific action: Ask to “File a dispute for an unauthorized ACH debit” and specifically mention you want to sign the “WSUD” or “Affidavit of Unauthorized Debit.”
5. Submit the proof: When the bank asks for details, provide the copy of your cancellation notice showing it predates the charge.
6. Monitor for provisional credit: Under Reg E, if the bank cannot resolve the investigation within 10 business days, they must generally provide temporary credit for the disputed amount while they continue looking.

Technical details and relevant updates

The differentiation between Standard Entry Class (SEC) codes is relevant for technical disputes. A web-based payment (WEB) has different authorization requirements than a telephone payment (TEL). If a consumer claims they never authorized a telephone payment, the bank may ask the merchant for an audio recording of the authorization. If the merchant cannot produce it, the dispute is typically resolved in the consumer’s favor.

Updates to NACHA rules have tightened the requirements for merchants regarding “authorization valid until revoked.” Merchants are increasingly required to make the cancellation process as easy as the enrollment process. If a merchant makes it technically impossible to cancel, a consumer’s documented attempt to cancel is often treated by banks as a valid revocation.

• Notice Window: 60 days from the date the statement containing the error was sent to you.
• Provisional Credit: Must be issued if the investigation takes longer than 10 business days (subject to certain exceptions).
• Merchant Re-presentment: A merchant can try to run a check up to two times if it bounces for insufficient funds (RCK), but cannot re-run a revoked authorization without new permission.

Statistics and scenario reads

The following patterns reflect common dispute outcomes and processing behaviors in consumer banking. These metrics serve as indicators for what consumers can expect regarding timelines and success probabilities based on the dispute type.

Dispute Type Distribution
Subscriptions (Authorization Revoked): 45%
True Fraud (Account Takeover/No Relationship): 30%
Double Billing/Incorrect Amount: 15%
Services Not Rendered: 10%
Subscription disputes require the highest burden of proof from the consumer regarding cancellation dates.

Success Rate Shifts (Before vs. After Documentation)
Phone call only → 30% Success
Phone call + Signed WSUD → 85% Success
WSUD + Cancellation Proof → 95% Success
Written documentation is the primary driver of claim approval.

Key Monitoring Metrics
Provisional Credit Speed: 5–10 business days
Investigation Duration: 45–90 days max
Liability Cap (Reporting < 2 days): $50
Liability Cap (Reporting > 60 days): Unlimited

Practical examples of ACH disputes

Common mistakes in ACH recovery

FAQ about ACH Stop Payment & WSUD

References and next steps

• Audit your statements: Check the last 60 days for any recurring charge that you thought you cancelled.
• Download the form: Ask your bank specifically for the “Written Statement of Unauthorized Debit” (sometimes called a Dispute Form or Affidavit), not just a “claim form.”
• Secure proof: Save the PDF or screenshot of your cancellation request to the merchant.
• Check deadlines: Mark the calendar for 10 business days after you file to check for provisional credit.

Related reading:

• Banking Finance & Credit
• Electronic Fund Transfer Act Rights
• Resolving Subscription Traps
• Bank Fee Waivers and Disputes

Normative and case-law basis

The primary governing framework for these disputes is the Electronic Fund Transfer Act (EFTA), implemented through Regulation E (12 CFR Part 1005). This federal regulation establishes the consumer’s liability limits ($50, $500, or unlimited) based strictly on when the consumer notifies the financial institution of the unauthorized transfer.

Additionally, the NACHA Operating Rules bind financial institutions to specific Return Reason Codes. When a consumer signs a WSUD, the bank uses code R10 (Customer Advised Not Authorized) or R07 (Authorization Revoked) to return the entry to the Originating Depository Financial Institution (ODFI). The promptness and accuracy of the WSUD are essential because NACHA rules impose tight timeframes (typically 60 days) for the bank to transmit these return codes.

Final considerations

Recovering funds via the WSUD process is a powerful consumer right, but it is bureaucratic and rigid. The system is designed to protect consumers from theft and errors, but it requires the consumer to play an active role in defining exactly when authorization ended. Ambiguity is the enemy of a successful claim.

Always prioritize written cancellation with merchants over phone calls. A five-minute phone call to cancel a service leaves no paper trail, whereas an email or web form submission provides the timestamped evidence necessary to force a bank to credit your account under federal law.

This content is for informational purposes only and does not replace individualized legal analysis by a licensed attorney or qualified professional.