How to Handle ACH Error Codes

ACH Terms and Acronyms

Anyone using the Automated Clearing House (ACH) may encounter an error code, also referred to as an ACH return code. In this knowledge base, we will cover potential errors that ACH users may encounter. We’ll cover all these error codes. Explain what each one means, its impact on you, your funding source, and how you can resolve the error.

Although using ACH for commercial real estate rent payments and collections offers convenience, significant time savings, automation, security, and reliability, sometimes errors can occur. Some factors are beyond our control, while others may come from unintentional actions we take. Understanding errors can help mitigate these issues.

If you need assistance setting up your ACH service in your tenant portal, check out our other knowledge base article. Tenant Payment Integration (ACH) in STRATAFOLIO

The acronyms and terms listed below will appear in the comprehensive table containing this information:

Acronym or Term	Description
ODFI	Originating Depository Financial Institution
RDFI	Receiving Depository Financial Institution
OFAC	Office of Foreign Assets Control
RCK	Re-presented Check Entry
Blocklisted	If a funding source is added to the blocklist as a result of an ACH return code, you will need to contact your Customer Excellence Manager to get it removed.

Potential ACH Errors

The table below outlines potential errors that someone using ACH may encounter. It includes the ACH error codes, their impact on you and your funding source, and the steps to resolve the error. For more information, you can check out Dwolla’s FAQs. Recognizing ACH error codes early can save time and prevent further complications.

Error Code	Description	Explanation	Return Time Frame	User Impact	Funding Source Impact	Action to Resolve The Error
R01	Insufficient Funds	The account does not have enough funds to cover the debit.	2 banking days	None	None	Confirm that there are sufficient funds in the account before retrying the transaction.
R02	Bank Account Closed	The account has been closed.	2 banking days	None	Unverified and Removed	Check if the account is closed. If it is, update with a valid funding source or provide a new account.
R03	No Account/Unable to Locate Account	The account number does not correspond to a valid account.	2 banking days	None	Unverified and Removed	Check the account details. If they are wrong, update the funding source with the correct information. Make sure the account number and routing number are accurate.
R04	Invalid Bank Account Number Structure	The account number structure is not valid.	2 banking days	None	Unverified and Removed	Check the account number format and make necessary updates to the funding source. Ensure the format is correct and review for any errors.
R05	Unauthorized Debit to Consumer Account Using Corporate SEC Code	A corporate debit entry was made to a consumer account without authorization.	60 calendar days	Suspended (If already deactivated, status remains unchanged)	Unverified, Removed, and Blocklisted	Use the correct SEC code: Only use CCD/CTX for business accounts, not consumer ones. Or, Get proper authorization: Always collect and retain valid authorization before debiting any account. Lastly, Be ready to show proof: If an unauthorized return occurs, Dwolla’s Risk team may request authorization documents to respond to their partner bank. Have those ready in case they reach out.
R06	Returned per ODFI’s Request	The Originating Depository Financial Institution (ODFI) requested the return.	Not Defined	Suspended (If already deactivated, status remains unchanged)	Unverified, Removed, and Blocklisted	Coordinate with the ODFI to understand the return reason and take action.
R07	Authorization Revoked by Customer	The customer revoked authorization for the debit.	60 calendar days	Deactivated	Unverified and Removed	Obtain a written statement of revoked authorization, and reactivate the account only after resolving the issue.
R08	Payment Stopped	The receiver requested a stop payment on the debit.	2 banking days	None	Unverified and Removed	Talk to the customer to understand why they stopped the payment. Resolve their concern before retrying the transaction. Confirm the stop payment with the receiver and check if it’s okay to proceed with the payment.
R09	Uncollected Funds	Sufficient balance exists, but uncollected items bring the balance below the debit amount.	2 banking days	None	None	Ensure all deposits have cleared before retrying the transaction. If there are pending items, wait for them to clear or deposit additional funds.
R10	Customer Advises Originator is Not Known to Receiver and/or Originator is Not Authorized by Receiver to Debit Receiver’s Account	The customer claims not to know the originator or did not authorize the debit.	60 calendar days	Suspended	Unverified, Removed, and Blocklisted	Get a written statement of the unauthorized debit and investigate the issue before retrying the transaction. Provide proof of authorization to the customer.
R11	Customer Advises Entry Not in Accordance with the Terms of the Authorization	The debit entry was inaccurate or improperly initiated.	60 calendar days	Deactivated	Unverified and Removed	Request a written statement for the unauthorized debit. Resolve the issue and obtain a new authorization before retrying the transaction.
R12	Branch Sold to Another DFI	The account was sold to another financial institution.	2 banking days	None	Removed	Update the funding source with the new bank account details.
R13	Invalid ACH Routing Number	The routing number is not valid.	Next File Delivery Time Following Processing	None	Unverified, Removed, and Blocklisted	Correct the routing number and update the funding source. Ensure the new routing number is valid.
R14	Representative Payee Deceased or Unable to Continue in That Capacity	The representative payee is deceased or unable to continue.	2 banking days	Suspended (If already deactivated, status remains unchanged)	Removed	Verify the status of the representative payee. Update the account information accordingly.
R15	Beneficiary or Account Holder Deceased	The beneficiary or account holder is deceased.	2 banking days	Suspended (If already deactivated, status remains unchanged)	Unverified, Removed, and Blocklisted	Confirm the account holder’s status. If deceased, close the account and update the funding source.
R16	Account Frozen/Entry Returned per OFAC Instruction	The account is frozen or the entry was returned per Office of Foreign Assets Control (OFAC) instruction.	2 banking days	Suspended (If already deactivated, status remains unchanged)	Unverified, Removed, and Blocklisted	Contact the RDFI to understand the reason for the freeze. Resolve any compliance issues before retrying the transaction.
R17	File Record Edit Criteria/Entry with Invalid Account Number Initiated Under Questionable Circumstances	The entry contains an invalid account number or was initiated under questionable circumstances.	2 banking days	Suspended (If already deactivated, status remains unchanged)	Unverified, Removed, and Blocklisted	Review the transaction for errors or suspicious activity. Correct any issues before retrying the transaction.
R20	Non-Transaction Account	The account is a non-transaction account.	2 banking days	None	Removed, and Blocklisted	Confirm the account type. If it’s a non-transaction account, update the funding source with a valid transaction account.
R22	Invalid Individual ID Number	The individual ID number is invalid.	2 banking days	None	Unverified	Verify the individual’s ID number. Correct any discrepancies and update the funding source.
R23	Credit Entry Refused by Receiver	The receiver refused the credit entry.	2 banking days	None	Unverified and Removed	Contact the receiver to understand the reason for refusal. Address the concern before retrying the transaction.
R29	Corporate Customer Advises Not Authorized	A corporate customer advises the debit was not authorized.	2 banking days	Suspended (If already deactivated, status remains unchanged)	Unverified, Removed, and Blocklisted	Obtain a written statement of unauthorized debit. Investigate and resolve the issue before retrying the transaction.
R31	Permissible Return (CCD and CTX only)	The return is permissible under CCD and CTX rules.	Not Defined	Suspended (If already deactivated, status remains unchanged)	Unverified, Removed, and Blocklisted	Coordinate with the ODFI to understand the reason for the return and take appropriate action.
R37	Source Document Presented for Payment	The source document was presented for payment.	60 calendar days	None	Removed	Ensure the source document is valid. Address any issues before retrying the transaction.
R38	Stop Payment on Source Document	A stop payment order was placed on the source document.	60 calendar days	Suspended (If already deactivated, status remains unchanged)	Unverified, Removed, and Blocklisted	Contact the receiver to understand the reason for the stop payment. Address the concern before retrying the transaction.
R51	Item Related to RCK Entry is Ineligible or RCK Entry is Improper	The item related to a Re-presented Check Entry (RCK) is ineligible or improper.	60 calendar days	Suspended (If already deactivated, status remains unchanged)	Unverified, Removed, and Blocklisted	Obtain a written statement of improper entry. Investigate and resolve the issue before retrying the transaction.

More Details on Some of the Listed Error Codes:

R02 Error Code – Account Closed

The tenant’s bank returned the ACH debit because the bank account used for the payment has been closed. Since the account is no longer active, the bank cannot process the transaction.

What the R02 Error Code Means in STRATAFOLIO

• The ACH payment did not go through.
• The bank account used for the payment is no longer valid.
• The tenant cannot continue using that account for ACH payments.

How to Resolve the R02 Error Code

1. Notify the tenant that the payment failed
   Inform the tenant that the ACH payment was returned because the bank account is closed.
2. Arrange an alternative payment method
   The tenant will need to pay using another method until they update their banking information in STRATAFOLIO.
3. Tenant must add a new bank account to their portal
   The tenant must enter a different, active bank account in their STRATAFOLIO tenant portal before they can make ACH payments again.
4. Reset autopay if applicable
   If the tenant previously had autopay enabled, they will need to set up autopay again using the new bank account.

Important Note on R02 Error Code

Because the account has been closed by the bank, future payments cannot be attempted using that account. A new bank account must be added before ACH payments can resume.

R11 Error Code

Why Did I Get An R11 Error

• Bank’s Perspective: The customer’s bank returned the debit because it believed the entry did not match the terms of the authorization. This could be the wrong amount, the wrong date, or a lack of required notice. It’s still considered an “authorized” debit, just processed incorrectly.
• Consumer Protection Angle: Many banks issue an R11 when a customer disputes a transaction they authorized but say was executed incorrectly. This is different from R10 (“unauthorized”), which kills the mandate entirely.

What Dwolla’s Doing Automatically For The R11 Error

• Funding Source Removal: Dwolla proactively deactivates the funding source and account when it sees an R11 code generated by the user’s bank. This is a risk-control measure to stop further returns.
• Your Option to Reactivate: You can re-enable the account and let the user re-add their funding source if, after reviewing, you’re confident the transaction error is fixable and the customer still consents.

What You Should Do Next For The R11 Error

1. Talk to the User: Confirm with them why they or their bank challenged the entry (e.g., wrong date, wrong amount). This is the “ultimate source of truth” because only they can clarify.
2. Correct the Error: If it was, say, a timing mismatch or an amount error, fix it.
3. Re-submit Properly: Nacha rules allow you to re-originate once corrected without a new authorization, provided the original mandate is still valid.
4. Document the Resolution: Keep records showing what was wrong and how it was fixed. This is important if your return rates get reviewed.

The key difference here is that R11 is fixable. It doesn’t mean fraud or lack of authorization; it just means your debit didn’t exactly match the authorization. Dwolla’s workflow is conservative (blocking then allowing you to re-enable), but that’s normal for ACH originators managing network risk.

R29 Error code – Corporate Customers Advises Not Authorized

The receiving bank (RDFI) has been notified by the business customer (the tenant) that the ACH debit was not authorized. This code applies to corporate or business bank accounts, not personal accounts.

When an R29 return occurs, the tenant’s bank has either been instructed to stop the debit or has blocked it as a precaution. As a result, the payment processor automatically removes the funding source and blocks it, and deactivates the tenant’s payment account to prevent further unauthorized transactions.

What this means in STRATAFOLIO

• The ACH payment was not processed.
• The tenant’s bank account has been removed from the payment processor.
• The tenant cannot make additional ACH payments until the issue is resolved and the account is reinstated.

How to Resolve the R29 Error Code

1. Tenant must contact their bank
   The tenant should speak with their bank to confirm that ACH debits from the payment processor are authorized and that any block or stop payment has been removed.
2. Provide the payment processor ACH ID (if requested by the bank)
   Banks sometimes require the originator’s ACH ID to locate or authorize transactions. Dwolla ACH Company ID:
   945440567
   (Note: The character at the end is a space.)
3. Request reinstatement of the tenant’s payment account
   After the tenant confirms the issue with their bank is resolved, STRATAFOLIO support must request that the payment processor reinstate the tenant’s account.
4. Tenant must re-enter their bank account information
   Because the processor removes the funding source after an R29 return, the tenant will need to add their bank account again before future ACH payments can be attempted.

Important Note for R29 Error Codes

Do not have the tenant attempt another ACH payment until support confirms the block has been removed. Attempting to process a payment while the account is deactivated may result in the funding source being permanently blocked by the processor.

Payment during resolution of R29 Error Codes

Since the ACH payment was not processed, the tenant will need to pay by another method until the ACH authorization issue is resolved.

Note for Next Day ACH transactions with R29 Error Codes

If the returned payment was processed using Next Day ACH, funds may have already been transferred before the return was received. In these cases, the amount may need to be recovered from the property owner’s account or offset against incoming deposits.

Best Practices for a Seamless ACH Experience

1. Enable two-factor authentication to add an extra layer of security to your account.
2. Do not share your login information with anyone.
3. Monitor your transactions regularly and ensure that your correct payment amounts are always entered.
4. Do not mark the stratafolio.com domain as spam. This could prevent you from receiving important alerts we send out.
5. Landlord: Ensure invoices are always added prior to the ACH transaction due date.
6. Tenant: Set up your autopay and leave the amount field blank to ensure you pay the full invoice amount. If you add an amount, ensure you update it when your lease escalations take effect to avoid underpaying your rent.

We hope this information provides you with the details you need to ensure a pleasant ACH experience. To learn more about ACH, read the article on how ACH works.