[$250] Rule - No system message after applying merchant rule to existing expense

[jponikarchuk]

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Version Number: 9.3.31-0
Reproducible in staging?: Yes
Reproducible in production?: N/A - new feature, doesn't exist in prod
If this was caught during regression testing, add the test name, ID and link from BrowserStack: #83005
Email or phone of affected tester (no customers): soindjoidjionjiosjn@gmail.com
Issue reported by: Applause Internal Team
Bug source: Pull Request QA execution
Device used: Mac 26.2 / Chrome
App Component: Money Requests

Action Performed:

Precondition:

• Enable Rules in More features.

1. Go to staging.new.expensify.com
2. Go to workspace chat.
3. Create an expense with Apple merchant.
4. Go to workspace settings > Rules.
   5.  Click Add merchant rule.
5. Create a merchant rule that changes merchant to Banana when merchant is Apple.
6. Open the created rule.
7. Apply Apply to existing unsubmitted expenses > Save rule.
8. Open the expense from Step 3.

Expected Result:

Workspace rule system message will show up.

Actual Result:

Workspace rule system message does not show up.

Workaround:

Unknown

Platforms:

• Android: App
• Android: mWeb Chrome
• iOS: App
• iOS: mWeb Safari
• iOS: mWeb Chrome
• Windows: Chrome
• MacOS: Chrome / Safari

Screenshots/Videos

1.mp4

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Issue Owner

Current Issue Owner: @mananjadhav

Upwork Automation - Do Not Edit

• Upwork Job URL: https://www.upwork.com/jobs/~022029298770265061452
• Upwork Job ID: 2029298770265061452
• Last Price Increase: 2026-03-04

[melvin-bot]

Triggered auto assignment to @RachCHopkins (Bug), see https://stackoverflow.com/c/expensify/questions/14418 for more details. Please add this bug to a GH project, as outlined in the SO.

[MelvinBot]

Proposal

Please re-state the problem that we are trying to solve in this issue.

When a workspace admin creates a merchant rule (e.g., change merchant from "Apple" to "Banana") and enables "Apply to existing unsubmitted expenses", the rule is applied to the matching expense but no system message appears in the expense chat. The expected behavior is a "workspace rule" system message (e.g., set the merchant to "Banana" via workspace rules) on the expense report.

What is the root cause of that problem?

The root cause is server-side: the backend handler for the SetPolicyCodingRule API command does not create MODIFIEDEXPENSE report actions with policyRulesModifiedFields when retroactively applying a merchant rule to existing expenses (i.e., when shouldUpdateMatchingTransactions=true).

Evidence from the client-side code (Expensify/App):

1. The client correctly sends the flag: MerchantRulePageBase.tsx:226 calls setPolicyCodingRule() with shouldUpdateMatchingTransactions=true, and Rules.ts:219-226 passes this as a parameter in the SetPolicyCodingRule API write command.

2. The client creates NO optimistic system messages: The Onyx data in setPolicyCodingRule() (Rules.ts:170-217) only updates policy.rules.codingRules — there are zero entries for REPORT_ACTIONS. The client relies entirely on the backend to push MODIFIEDEXPENSE report actions via Pusher.

3. The client rendering code works correctly: ModifiedExpenseMessage.ts:556-567 detects policyRulesModifiedFields in the report action's originalMessage and calls getRulesModifiedMessage() (line 210-268) to produce text like "set the merchant to 'Banana' via workspace rules". Tests at ModifiedExpenseMessageTest.ts:853-998 confirm this works.

4. Conclusion: Since the client sends the correct flag, has no optimistic message creation, and the rendering code is proven to work — the backend must not be creating the MODIFIEDEXPENSE report actions when processing shouldUpdateMatchingTransactions=true.

What changes do you think we should make in order to solve the problem?

The fix must be made server-side in the SetPolicyCodingRule command handler (in the Auth or Web-Expensify backend). When shouldUpdateMatchingTransactions=true:

1. After applying the rule fields to each matching transaction, the backend should create a MODIFIEDEXPENSE report action on the expense's parent report.
2. The report action's originalMessage must include a policyRulesModifiedFields object containing only the fields explicitly set by the rule (e.g., { merchant: "Banana" }), along with the policyID.
3. The policyRulesModifiedFields type supports: merchant, category, tag, comment, billable (boolean), reimbursable (boolean), tax (object with field_id_TAX), and reportName — as defined in OriginalMessage.ts:842-870.

No client-side (Expensify/App) changes are needed — the rendering infrastructure is already in place and working.

What alternative solutions did you explore? (Optional)

Client-side optimistic messages: We could theoretically create optimistic MODIFIEDEXPENSE report actions on the client. However, this would require the client to know which transactions match the rule filter, which is both complex and error-prone (the backend is the source of truth for matching). The correct approach is for the backend to create these report actions as part of the retroactive application.

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Next Steps for Contributor+ team: Reply with @MelvinBot implement this to create a draft PR, or @MelvinBot <your feedback> to refine this analysis.

[melvin-bot]

Triggered auto assignment to Contributor-plus team member for initial proposal review - @mananjadhav (External)

[melvin-bot]

Job added to Upwork: https://www.upwork.com/jobs/~022029298770265061452