TEL Telephone Initiated Entries

1. TEL Telephone Initiated Entries UMACHA July 17, 2007 1:00 pm – 2:30 pm CT

2. Agenda TEL – Telephone Initiated entry • ODFI Warranties • Authorization Requirements • Source Documents/Eligible Items • Specific Rules that apply • Source Document Retention • Transaction flow • Return process

3. What is TEL? • Telephone Initiated Entry • Single Debit Entry • Oral Authorization obtained from the Receiver via the telephone to effect the transfer of funds from a consumer account of the Receiver

4. ODFI Warranties - TEL • The Originator must employ commercially reasonable procedures to verify: • Identity of the Receiver • Routing Numbers used are valid • Liability for Breach of Warranty

5. ODFI Warranties - TEL • TEL entry reporting requirements • Unauthorized returns that exceed 2.5% • Within 10 banking days of receipt of the National Association’s written request • Information that needs to be provided: • Name, address, phone number, contact person, principle owner(s), and taxpayer id of the Originator • A general description of the nature of the business of the Originator • An explanation of the Originator’s reason(s) for the excessive returns

6. TEL - Authorization • The Receiver has orally authorized the Originator to initiate a debit entry to their consumer account • Must be readily identifiable and clearly state its terms • Minimum information MUST be included as part of the authorization • The Originator must either: • Tape record the authorization • Provide the Receiver with written notice confirming the oral authorization prior to the Settlement Date of the entry

7. TEL - Authorization • Minimum information to be included • The date on or after which the ACH debit to the Receiver’s account will occur • The amount of the transaction • The Receiver’s name • A telephone number for Receiver inquiries that is answered during normal business hours • The date of the Receiver’s authorization • A statement by the Originator that the authorization obtained from the Receiver is for a single-entry ACH debit

8. TEL – Special Rules • A TEL entry may only be used where there is no standing authorization for the origination of ACH entries to the Receiver’s account • A TEL entry may ONLY be used when there is an Existing Relationship between the Originator and the Receiver, or when there is not an Existing Relationship and the Receiver initiates the call

9. Existing Relationship - TEL • The Originator and Receiver have an existing relationship when: • There is a written agreement in place between the Originator and the Receiver • The Receiver has purchased goods or services from the originator within the last two years

10. TEL –Authorization Retention • An Originator must retain the original or a microfilm copy of each authorization for two (2) years….for TEL entries: • The original or duplicate tape recording of the authorization • The original or microfilm of written notice • At the request of the ODFI, the Originator must provide a copy of the authorization for its use or the use of an RDFI requesting it • Within 10 banking days

11. TEL – Transaction Flow Authorization via telephone to debit a consumer account Receiver(Customer) TEL Auth must be recorded or in writing prior to settlement date

12. TEL – Return Process TEL entries may be returned for any valid return reason • General TEL returns – • Made available to the ODFI by opening of business on the second banking day following settlement date of the original entry • Unauthorized returns – • R10 – Customer Advises Not Authorized • Need WSUPP (Written Statement Under Penalty of Perjury) • Do NOT return TEL entries using R07 – Authorization Revoked • These entries are single-entry transactions

13. TEL – Stop Payment Stop Payments are allowed on TEL entries…… • Order must be provided to the RDFI at such time and in such manner as to allow the RDFI a reasonable opportunity to act upon

14. Let’s Review …… • Ms Smith is just finishing up with dinner and her phone rings….. • Ms Smith answers the phone and hears it is Fingerhut on the phone, advertising some new 100% cotton plush towels • Ms Smith receives a catalog from Fingerhut and frequently orders items from the catalog (within the previous 6 months) • Fingerhut convinces Ms Smith to purchase the towels and gives checking account information to the phone representative at Fingerhut • Can this be a TEL entry?

15. Let’s Review …… • Mr Jones is watching the football game on TV on Monday night…. • An ad comes on the TV showing this barbeque grill set – contains everything from cooking utensils to heavy duty cleaners for your grill. • If Mr Jones is one of the first 50 callers to order this barbecue grill set, he will receive a “free gift” with his purchase. • Mr Jones decides to order the barbeque grill set and gives checking account information to purchase the item (s). • Can this be a TEL transaction?

16. Let’s Review …… • Mr Anderson has just walked in the door at home after a hard days work…… • His phone rings and he hears the person on the phone is selling Ginsu steak knives. • The salesman is really persistent and convinces Mr Anderson to purchase the Ginsu steak knives, and gives his checking account information to purchase the item • Can this be a TEL transaction?

17. Questions?