8.1 Notification of Change (NOC / COR): Structure & Change Codes (C01-C07)

8.1 Notification of Change (NOC / COR): Structure & Change Codes (C01-C07)

Core Principle: Exception processing in the ACH Network balances financial finality with operational accuracy. While Return Entries dishonor and reverse unpostable transactions, a Notification of Change (NOC) serves as an automated administrative tool. An NOC is a zero-dollar ($0.00) non-monetary entry created by the Receiving Depository Financial Institution (RDFI) to notify the Originating Depository Financial Institution (ODFI) and its Originator that information contained in an entry is incorrect or outdated, while allowing the RDFI to post the original entry to the Receiver's account.

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1. Operational Purpose & Foundational Principles of NOCs

When an RDFI receives an ACH credit or debit entry containing incorrect, obsolete, or non-standard administrative data (such as an outdated account number resulting from a bank merger, or an incorrect routing number for a branch), the RDFI has two primary processing choices:

1. Return the Entry: If the account cannot be identified or if bank policy prohibits posting, the RDFI returns the item using an R-code (e.g., R03 - No Account/Unable to Locate Account). The funds are returned through the ACH Operator, and the transaction fails.
2. Post the Entry and Originate an NOC: If the RDFI can identify the intended customer account and post the transaction, the RDFI posts the live dollar entry and originates a Notification of Change (COR) to communicate the correct routing/account details back to the Originator. This avoids disrupting customer payroll, recurring bill payments, or vendor settlements.

+---------------------------------------------------------------------------------------------------------+
|                                 ACH RETURN VS. NOTIFICATION OF CHANGE (NOC)                             |
+---------------------------------------------------------------------------------------------------------+
| Dimension                   | ACH Return Entry (R-Codes)          | Notification of Change (COR / C-Codes)  |
+-----------------------------+-------------------------------------+-----------------------------------------+
| Monetary Impact             | Live dollar reversal (Credit/Debit) | Zero-dollar ($0.00) informational entry |
| Transaction Posting         | Original entry is NOT posted        | Original entry IS posted to account     |
| Primary Objective           | Dishonor/reject invalid payment     | Correct administrative/routing data     |
| Standard Entry Class (SEC)  | Same SEC as original or RET         | COR (Automated Notification of Change)  |
| Addenda Record Type         | Type 7, Addenda Type Code 99        | Type 7, Addenda Type Code 98            |
| RDFI Legal Warranty         | Entry returned per Nacha Rules      | Corrected data in NOC is 100% accurate  |
+---------------------------------------------------------------------------------------------------------+

RDFI Warranty on NOC Origination

Under Nacha Operating Rules, when an RDFI originates an NOC, the RDFI warrants to the ODFI, the ACH Operator, and the Originator that:

• The information contained in the Corrected Data field is accurate and corresponds to the Receiver's actual account records maintained at the RDFI;
• The original entry was posted to the correct account or handled in accordance with the Receiver's instructions;
• The NOC is being transmitted within the mandatory timeframes established by the Rules.

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2. Standard Entry Class (SEC) Code COR & File Architecture

All automated Notifications of Change flow through the ACH Network using the dedicated Standard Entry Class (SEC) code COR (Automated Notification of Change).

• Consumer and Corporate Applications: Whether the underlying original transaction was a consumer entry (PPD, WEB, TEL) or a corporate transaction (CCD, CTX), any resulting automated NOC is transmitted under the COR SEC code in the Company/Batch Header Record (Record Type 5).
• Zero-Dollar Entry Detail: The Entry Detail Record (Record Type 6) within a COR batch carries a transaction code indicating a zero-dollar entry (e.g., Transaction Code 21 for Automated Return/NOC to Demand Account Credit, 26 for Automated Return/NOC to Demand Account Debit, 31 for Savings Credit, 36 for Savings Debit), and the Amount field (positions 30–39) is strictly zero ($0000000000).
• Mandatory Addenda Record: Every COR entry detail record must be accompanied by exactly one Type 7 Addenda Record with Addenda Type Code 98.

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3. Type 7 Addenda Record Layout (Addenda Type Code 98)

The technical anatomy of an NOC resides in its Type 7 Addenda Record. Nacha specifications prescribe an exact 94-character fixed-width layout:

+---------------------------------------------------------------------------------------------------------+
|                     NOC TYPE 7 ADDENDA RECORD TECHNICAL SPECIFICATION (ADDENDA TYPE 98)                  |
+--------+---------+-----------------------------------+--------------------------------------------------+
| Pos    | Length  | Field Name                        | Description / Content                            |
+--------+---------+-----------------------------------+--------------------------------------------------+
| 01-01  | 1       | Record Type Code                  | Constant '7' (Addenda Record)                    |
| 02-03  | 2       | Addenda Type Code                 | Constant '98' (Notification of Change)           |
| 04-06  | 3       | Change Code                       | 3-character change reason code (e.g., 'C01')     |
| 07-21  | 15      | Original Entry Trace Number       | Trace Number from original Entry Detail Record   |
| 22-27  | 6       | Reserved                          | Space-filled (Blank)                             |
| 28-35  | 8       | Original Receiving DFI Routing    | First 8 digits of original entry's RDFI routing  |
| 36-64  | 29      | Corrected Data                    | Left-justified, space-filled new account/RTN data|
| 65-79  | 15      | Reserved                          | Space-filled (Blank)                             |
| 80-94  | 15      | Trace Number                      | Trace Number assigned to this NOC addenda record |
+--------+---------+-----------------------------------+--------------------------------------------------+

Critical Field Positions for the AAP Exam:

1. Addenda Type Code (Positions 02–03): Always 98 for Notifications of Change (contrasting with 99 for Returns).
2. Change Code (Positions 04–06): Identifies the exact reason for the change and dictates how the Corrected Data field must be parsed.
3. Original Entry Trace Number (Positions 07–21): The 15-digit trace number from the live entry that prompted the NOC, allowing the ODFI and Originator to pinpoint the specific transaction.
4. Corrected Data (Positions 36–64): A 29-character alphanumeric field containing the new, valid account number, transit routing number, or transaction code as dictated by the change code.

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4. Master Matrix of Standard Change Codes (C01–C14)

Nacha defines specific 3-character alphanumeric Change Codes (C-codes) to communicate precise administrative corrections:

Exam Watch: Note the numbering gap: C04 is a retired historical code (formerly Incorrect Individual Name). On the modern AAP exam, remember that C01, C02, C03, C05, C06, and C07 represent the core operational matrix.

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5. Refused Notification of Change Framework (C61–C69)

When an ODFI receives an NOC from an RDFI, the ODFI may discover that the NOC is defective, unprocessable, untimely, or misrouted. In such cases, the ODFI does not simply discard the file; rather, the ODFI originates a Refused Notification of Change back to the RDFI.

+---------------------------------------------------------------------------------------------------------+
|                                   REFUSED NOC REASON CODES (C61–C69)                                    |
+------+------------------------------------+-------------------------------------------------------------+
| Code | Reason Description                 | Trigger Condition / Operational Scenario                    |
+------+------------------------------------+-------------------------------------------------------------+
| C61  | Misrouted Notification of Change   | The ODFI is NOT the Originating DFI of the original entry.  |
| C62  | Incorrect Trace Number             | Original Entry Trace Number does not match any entry by ODFI|
| C63  | Incorrect Transit/Routing Number   | Corrected RTN provided by RDFI in Corrected Data is invalid |
| C64  | Incorrect Individual Identification| Identification Number in original entry was actually correct|
| C65  | Incorrect Reason Code              | Change code provided is inappropriate for original entry    |
| C67  | Duplicate Notification of Change   | ODFI already received an identical NOC for original entry   |
| C68  | Untimely Notification of Change    | RDFI originated NOC outside mandatory 2-banking-day window  |
| C69  | Field Error(s)                     | NOC record contains structural syntax or mandatory field err|
+------+------------------------------------+-------------------------------------------------------------+

Refused NOC Operational Requirements

• SEC Code: Refused NOCs are originated using SEC code COR with Addenda Type Code 98.
• Transmittal Deadline: The ODFI must transmit the Refused NOC to the ACH Operator within fifteen (15) calendar days of the Settlement Date of the NOC entry.
• Finality: The RDFI has no automated reply mechanism for a Refused NOC. Upon receipt, the RDFI must manually review its internal routing tables and customer records to resolve the underlying data inconsistency.