This guide explains what the account holder refund product is and how by using this automated process, a paper check can be issued to return remaining funds to an account holder once the account is canceled. Once the refund product has been configured, the check can be issued via the automated process outlined in this guide, or you can self-issue a check through the <<glossary:CST>>.

The account holder refund process can be initiated by the account holder, or by the program manager. This guide contains the parameters to set during product configuration to optimize the experience for program managers and their account holders.

The refund product is for clients who need a solution to offer refunds for closed accounts.

## Refund product process

The refund product process has five basic steps:

1. You or the account holder decide to close an open account that contains a positive balance.

2. You call the <a href="ref:post_modifystatus" target="_blank">Modify Status</a> endpoint to close the account. See <a href="doc:about-accounts#closing-accounts" target="_blank">Closing accounts</a> in the _About Accounts_ guide for more information.

3. You present options to refund the balance before the account is closed. These options would already be determined in the cardholder T&Cs and cannot be changed. See [Recommended sequence to refund closed accounts](🔗).

4. After a configurable waiting period, the remaining balance transfers to a Galileo-owned refund account. Galileo recommends choosing a waiting period based on your standard authorization expiration times and any potential payment hold activity the client may initiate.

5. Galileo issues and mails a paper check for the full refund amount to the former account holder.

## Recommended sequence to refund closed accounts

Accounts may be closed for a number of reasons by you or by the account holder. When an account with a positive balance is closed, Galileo recommends that you present the following options to the account holder, in this order:

1. **Allow/encourage the account holder to spend the remaining funds.** This process does not require setting up the refund product.

2. **Allow the funds to be obtained through an ATM withdrawal by the account holder.** (Keep in mind the machine will only provide whole dollars, not cents. This may incur a loss on the part of the account holder).

3. **Initiate an ACH transfer** of the remaining funds back to the account holder’s preferred financial institution. See <a href="doc:ach-endpoints#creating-an-ach-transaction" target="_blank">Creating an ACH transaction</a> in ACH Endpoints for more information. Galileo recommends you establish these options as part of your cardholders terms and conditions. We always recommend vetting and approval of your partner bank as your first step in this process. In some cases your partner bank may offer to mail refund checks, this is a good question to ask them in your vetting process.

4. **Use the refund product** to offer the account holder a paper check via the Galileo refund product process.

### Canceled with refund

**Account status: C** If the account holder initiates the closure of an account with a positive balance, your terms and conditions should clearly outline the policy around when and how a refund will be issued.

Once the funds reach the Galileo refund account, Galileo issues the refund check, which includes:

• The program name

• The name the account holder

• The full refund amount

• Instructions for the account holder to cash the check with 180 days

• Envelope with Galileo return address

#### If the check is not cashed or is returned to Galileo

Funds are moved back into the refund account. If you have an updated address for the account holder, the address can be updated in the CST or via batch file and you can manually reissue a check.

### Canceled without refund

**Account status: Z** An account that is closed without a refund can be the result of a zero balance on the account, fraudulent activity on the card, or government seizure of the individual account holder’s assets. None of these scenarios require the use of Galileo’s refund product as no refund will be issued back to the account holder.

## Refund product configuration

To configure the refund product, you will work with Galileo to set up the product. Your Galileo representative will provide best practices on the mandatory and optional parameters that will need to be set. See [Galileo setup](🔗) for the product parameters.

### Information required to set up a refund product

You need to make adjustments to your public terms and conditions that outline what the refund process looks like for the account holder.

## Account holder refund workflow

1. You or the account holder close the account.

2. If the account is closed without refund, you send a Modify Status request with `type: 20`. The account status is set to `Z` (closed without refund).

3. If the account is canceled with refund, you send a Modify Status request with `type: 13` and the account status is set to `C` (closed with refund).

4. Galileo sends the `NOTE: note` event.

5. For an account closed with refund, the waiting period starts. The configurable waiting period is set by MDAYC.

6. Optional: the account holder may initiate an ACH request to withdraw funds before the waiting period is over.

7. At the end of the waiting period, if there are still funds in the account, Galileo moves the funds out of the account. Galildo sends the <a href="ref:api-reference-events-api-adj" target="_blank">`BADJ: adj`</a> event.

8. Galileo moves the funds into a refund account.

9. Galileo issues and mails a paper check.

10. The account holder receives the check after about 30 days.

11. The account holder cashes the check within 180 days. If the check is not cashed in 180 days, the funds are immediately transferred back to the Galileo refund account and held indefinitely until an action is taken. If you have an updated address for the account holder, the address can be updated in the CST or via batch file and you can manually reissue a check.

📘

Note

If you put a stop payment on a refund check, the funds will be returned to your refund account in 24–48 hours.

## Galileo setup

These parameters are required to allow Galileo to process refunds for your customers and customize the experience to your program’s needs. All parameters are set at the product level.