The ACH authorization you signed alongside your merchant cash advance agreement was not a formality. It was the operative document giving the funder the right to reach into your business bank account every business day, before you make any other payment, and extract its designated amount.
Understanding how that authorization works, and where its limits are, changes what you can do when the arrangement goes wrong.
1. Authorization Is Specific, Not General
NACHA rules require that each ACH debit be authorized for a specific amount, a specific timing, and a specific purpose. The authorization you signed is tied to the terms of the underlying MCA agreement. When the funder debits an amount that exceeds what the agreement permits, or continues debiting after the agreement has been satisfied, those subsequent entries fall outside the authorization. They are, in the precise NACHA definition, unauthorized.
2. You Can Revoke ACH Authorization at Any Time
This surprises most business owners. NACHA rules permit an account holder to revoke ACH authorization, and once revoked, the funder is prohibited from originating further debits against that account. Revocation does not extinguish your debt. It does not constitute default by itself, though many MCA contracts try to characterize it that way. It stops the bleeding while you assess your position.
Revocation must be in writing and delivered to both the originating bank and your own financial institution. Verbal revocation is insufficient.
3. Your Bank Has Return Codes That Work in Your Favor
When a business account holder disputes an ACH debit, the bank processes the dispute using standard return codes. R10 designates a customer-advised unauthorized entry. R07 designates authorization revoked. Each of these codes initiates a reversal of the debited amount and triggers a review at the originating depository financial institution.
Banks are often reluctant to pursue business account disputes aggressively, on the assumption that the authorization was validly given. But an authorization given for one amount does not authorize a different, larger amount. That distinction is worth presenting directly to your bank’s ACH department.
4. NACHA Monitors Originator Return Rates
Funders who generate excessive unauthorized return disputes face compliance reviews under NACHA’s risk management framework. When a funder’s overall return rate or unauthorized return rate exceeds established thresholds, NACHA can require corrective action or suspend origination privileges. This regulatory pressure creates a reason for funders to resolve legitimate disputes quietly, rather than defend them publicly.
A filed dispute does more than produce a credit. It creates a record that affects the funder’s standing within the ACH network.
5. Daily Debits Can Compound Faster Than You Expect
At two hundred fifty dollars per business day, a funder collects approximately fifty-five thousand dollars over a calendar year. If your agreement specified a total payback of sixty thousand dollars and you have been in repayment for fourteen months, the math warrants verification. Funders sometimes continue debiting through clerical inattention rather than design, but the effect on your account is identical either way.
Tracking the running total against the amount purchased is your responsibility. The funder has no regulatory obligation to notify you when the balance approaches zero.
6. The Authorization Does Not Survive the Agreement
Once the total purchased amount has been collected, or once the agreement is otherwise satisfied, the ACH authorization is functionally extinguished. A funder that continues debiting after payoff has no authorization for those entries. This is among the cleaner legal positions available to business owners in MCA disputes, because the underlying obligation is gone.
Keep a running ledger of every debit from the first payment through the last. That record is the basis for any post-payoff recovery action.
7. Emergency Relief Is Available Before the Account Empties
Courts have granted temporary restraining orders against ongoing ACH debits in MCA disputes when the business demonstrated imminent harm and a colorable challenge to the authorization or the amount. The key is timing. Relief sought after the account has been drained to zero is harder to obtain than relief sought while the harm is ongoing and preventable.
An attorney reviewing your authorization, your agreement, and your debit history can identify in a single session whether a viable challenge exists. That conversation is worth having sooner rather than later.
If you believe your MCA funder is debiting more than authorized, or continuing to debit after payoff, a consultation is where this conversation begins. The NACHA framework provides tools that most business owners in distress have never been told about.
