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TexPayment Resource

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Direct Deposit Payments Made in Error
Policy on Letters of Indemnification

When a state agency issues an erroneous direct deposit payment, and NACHA’s five banking-day period has expired for requesting an ACH reversal, there is no NACHA-sanctioned alternative for the Comptroller’s office to attempt to recover the funds. After the five (5) banking-day period for an ACH reversal has expired, resolution may only be achieved by direct communication between the payees and their financial institutions.

An attempt to recover the funds from the receiver’s account will result in the Receiving Depository Financial Institution (RDFI) requesting a Letter of Indemnification from the Originating Depository Financial Institution (ODFI).

State agencies, as well as the Comptroller’s office, are prohibited from providing Letters of Indemnification to the RDFIs or the state’s ODFI. This policy is in accordance with Attorney General Opinion MW-475 (1982), as well as Section 49, Article III of the Texas Constitution, which states in part, “No debt shall be created by or on behalf of the State.”

Violations of this policy will result in a notification to the agency’s chief fiscal officer and a post-audit finding. Any potential repercussions as a result of an unauthorized LOI are the sole responsibility of the agency that initiates the LOI.