Accredited ACH Professional (AAP) Practice Exam

Which SEC Code requires oral authorization?

1. ARC

2. Pop-up authorization

3. TEL

4. Batch processing

The correct answer is: TEL

The SEC code that requires oral authorization is TEL (Telephone Initiated Entries). This is specifically designed for transactions initiated over the phone, where the originator must obtain the permission of the receiver verbally before initiating the transaction. This requirement for oral authorization helps ensure that the consumer is aware of and agrees to the debit being made to their account, which is a critical consumer protection feature in the ACH network. In contrast, the other options do not require oral authorization. For instance, ARC (Accounts Receivable Check) transactions are typically initiated based on a check converted to an ACH entry and do not require prior authorization from the consumer in a conversational format. Pop-up authorization is not an SEC code but refers to digital or electronic authorization methods often used in online transactions. Batch processing refers to the method of submitting multiple transactions at once and does not pertain to the requirement of authorization by voice. Thus, TEL is unique in mandating oral consent prior to processing these types of ACH entries.