[usehackernews]

These are called ACH return codes and are similar to disputes on credit card.

Liability is on the receiving or the originator institution. But in practice, it depends on the contract with the “processor”. Many Pay By Bank “processors” offer a guarantee model to cover these returns. Otherwise, liability is typically on the merchant.

However, Nacha is beginning to iterate on their return codes to better fit the e-commerce use case and clearly define liability.