ACH Return Code R16 Meaning

What Is ACH Return Code R16?

ACH return code R16 means the receiving bank froze the customer’s account or restricted access to funds.

Because the account is under restriction, the bank cannot process the ACH debit or credit, so the payment is returned.

This is not usually caused by the merchant. It is typically a bank-side action.

Simple Explanation

R16 = The bank blocked the account temporarily.

The account still exists.
But transactions are not allowed at that moment.

Common Reasons for R16 Returns

1. Fraud Investigation

If the bank detects suspicious activity, it may freeze the account while reviewing transactions.

During this period, all ACH payments fail with R16.

2. Legal Order or Compliance Hold

Courts, tax authorities, or government agencies may order a hold.

Examples include:

• Tax levy

• Court judgment

• Bankruptcy process

• Legal investigation

3. Customer Requested Freeze

Sometimes customers freeze their own account after:

• Losing debit card

• Suspecting identity theft

• Reporting unauthorized activity

4. Internal Bank Review

Banks sometimes restrict accounts if:

• Large unusual deposits appear

• Rapid transfers occur

• Identity verification is pending

Is R16 Permanent?

Usually no.

Most R16 restrictions are temporary.

Once the bank clears the issue, the account may work normally again.

How Businesses Should Handle R16

✔ Step 1 — Do NOT Retry Immediately

Retrying right away usually fails again.

The restriction must be removed first.

✔ Step 2 — Contact the Customer

Ask them to check with their bank.

Example message:

“Your payment could not be processed because your bank temporarily restricted the account. Please confirm with your bank and let us know when it is resolved.”

✔ Step 3 — Request Alternate Payment (Optional)

If the payment is urgent, request:

• Another bank account

• Credit/debit card payment

• Manual transfer

✔ Step 4 — Retry Later Only After Confirmation

Once the customer confirms the freeze is lifted, you can safely retry the ACH.

Is R16 a Fraud Signal Against the Business?

No.

Unlike R10 or R11, R16 usually does not indicate a customer dispute or merchant error.

It is primarily a bank compliance or security action.

Processors normally do not penalize merchants for occasional R16 returns.

How to Prevent R16 Issues

You cannot fully prevent R16 because it depends on the customer’s bank.

But you can reduce payment delays by:

✅ Sending payment reminders early
✅ Allowing backup payment methods
✅ Following up quickly after a failed ACH

Fast communication keeps revenue flowing.

Final Thoughts

ACH return code R16 means the customer’s bank froze or restricted the account, preventing the transaction from processing.

It is usually temporary and outside the merchant’s control.

The best solution is simple: contact the customer, wait for the bank restriction to clear, then retry the payment.