ACH Payroll Processing & Fedwire Blog

ACH Payroll Processing & Fedwire Blog

Federal Reserve Warning: Fraudulent FedACH Payment Activity

Monday, July 17, 2017
Federal Reserve Warning: Fraudulent FedACH Payment Activity

According to the Federal Reserve, there has been a recent increase in fraudulent payment activity in the FedACH® network. Unauthorized debits, including consumer bill payments and other larger dollar items possibly including ACH direct deposits for payroll, have been originated using Federal Reserve Bank routing transit numbers as the receiving institution. These debits have been returned through the normal ACH return process, using a “R03 – No Account/Unable to Locate Account” return reason code.


FedACH is the Federal Reserve Banks’ ACH service used to clear and settle credit and debit transactions, typically on a one-day lag. Typical ACH transactions include direct deposit of payroll, direct payments for monthly bills and various federal government payments. In 2014, the Fed processed an average of 46.3 million commercial automated clearinghouse transactions each day totaling $79.2 billion for an average of $1,712 per transaction.

Cachet Financial Services uses the FedACH network as part of our payroll service to process ACH direct deposits.

What Can You Do?

Because of the volume of fraudulent debits, the appropriate law enforcement agencies have been notified. The Federal Reserve encourages financial institutions to closely monitor this activity to identify these items as early as possible and take appropriate actions.

If your organization has incurred a financial loss as a result of this fraud scheme, contact Special Agent Brad Carpenter with the FBI Cyber Division.

Contact us to learn more about how to prevent fraudulent ACH direct deposit payroll transactions, as well as why using our service offers greater flexibility and cost-effectiveness than your bank.

Contact us to learn more about ACH direct deposit payroll processing

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