Pay Went to Unintended Recipient Due to Incorrect Bank Account Number Supplied

danjerman on 22/11/2023 - 19:37

This is in South Australia in case it makes a difference.

My 16 year old son recently started a part time job. He gave the employer incorrect bank details by adding an extra digit in the middle of his bank account number. The employer entered the 10 digits into their payroll but either their payroll system or their banking software truncated the account number to 9 digits. Unfortunately, this 9 digit number was a valid bank account number at the same BSB.

Two payments went to this unintended recipient of around $350 in total. After we raised this with them, the employer has contacted their bank to initiate a process to get it back but the receiving bank has replied that the unintended recipient has refused to give the money back. Basically, they are saying tough luck.

This was reported to them more than 10 business days after the payments but less than 7 months. The epayments code says that up to 7 months, the receiving bank must take the money from the recipient if they are satisfied that it was not a valid payment. (I think the recipient gets 10 days to prove they are entitled to it). This has not occurred. I'm wondering if the epayments code applied to businesses sending money to other bank accounts or if it is only for consumer to consumer transactions?

If the epayments code does not apply in this case, is there anything similar?

Is there any recourse available to my son? If we wanted to pursue this further how would this work, who would we pursue and how would we get their details if it is the unintended recipient?

What about the employer? Their systems did not send the money to the 10 digit account number that was supplied but sent it to a 9 digit account number. Is there liability there?

I'm tempted to chalk it up to experience as a lesson in double checking numbers but it seems like a harsh punishment for a simple mistake and I wonder whether other checks and balances should have caught this and whether the banks should be doing more.

Any help or guidance would be most appreciated!

Many Thanks

Financial

Comments

        • doczoid on 25/11/2023 - 00:38

          If the money isn’t in the account how do you expect them to do that?

          • cameldownunder on 25/11/2023 - 16:59
            -1

            @doczoid: Something in the line "You have taken money out of your account that was not yours, please return amount $xxx within the next 10 Business Days …"

            • doczoid on 27/11/2023 - 11:42
              +1

              @cameldownunder: And if they don’t return it?

              • cameldownunder on 27/11/2023 - 12:05
                -1

                @doczoid: Geeeee I am not a lawyer, but I am sure there are ways of clawing back the money, especially because it's very unlikely that it was deposited in a scammer account. But you need to insist, and not roll over like most would do.

  • Danam on 23/11/2023 - 16:18
    +1

    Personally, I'd be encouraging my child to do two things:

    1. Talk to their employer again and ask them to follow up with the bank again.
    2. Ask their employer for their branch, and go there in person to discuss the situation. Make a booking to speak with someone. If they say they can't help you, make an appointment to speak with the branch manager. If they won't help you further, ask what body you should contact to escalate the situation. Inquire with the bank about the process of filing a police report.

    I wouldn't want to nag my employer constantly, but I'd be a headache for the branch. It would surprise me if they didn't just pay you the $350 themselves and give you the "just this time" talk.

    When I stated working, doing any of that would have made me uncomfortable, but you have to start building confidence somewhere.

    It might be good to discuss some best practices when entering data like this. Like saying the numbers out loud as you cross reference. Watching people do banking or filling out forms on their phone gives me heart palpitations. I need to see the whole thing in front of me on a monitor.

    • doczoid on 23/11/2023 - 17:34

      The branch won’t be able to help, the intended recipient of a payment is entirely irrelevant to their process. If the employer goes they probably still won’t help but they can at least lodge a dispute

  • FlyingMiffy on 23/11/2023 - 16:45

    Just going to say that the person on the receiving end probably doesnt believe in Karma…

    • furyou on 25/11/2023 - 22:46

      there are a durn lot of those…
      but also sad, what's oz turning into

    • spoonmugen on 28/11/2023 - 16:55

      account might not be active?

  • rumblytangara on 23/11/2023 - 16:56

    Situation sucks

    I'm tempted to chalk it up to experience as a lesson in double checking numbers but it seems like a harsh punishment for a simple mistake

    Another way of looking at it is that it's a damn cheap lesson that's going to stick with him for the rest of his life, to double check critical information like bank account numbers.

  • Central Intelligence on 23/11/2023 - 17:11
    +5

    I remember a colleague at the law firm I was working at had a client come in after mistakenly transferring funds totalling around $70,000 into an account which later turned out to be a insolvent entity and had only realised of the mistake after roughly a month. It was a while ago and I do not remember the exact details but the epayments code does not apply to small businesses so it was basically put into the too hard basket.

    The money was somehow successfully recovered, mostly because of a slip up because the recipient or appointed administrator randomly called the law firm to discuss the matter, upon which we were able to get their details as without those details the case was dead in the water because the bank was not obliged to release those details. I believe the client or possibly my colleague must have sent a few small transactions with a descriptor to call the firm.

    A lot of people think it is theft if someone keeps money but you need to prove the elements of the crime and here depending on who you talk to will probably state there is potentially no offence committed. Especially problematic is there might not have been mens rea and the recipient just pressed the money out from the ATM and lets just assume that person is on Centrelink. If the recipient states they thought it was just a government bonus, and they often come in amounts ~$100-$1000, randomly in $50 figures e.g. $650 bonus for energy bill relief?, then you will likely lose the case.

    Let's assume that the recipient has no technical savvy, and it is not uncommon to find long term Centrelink recipients to not be financially able to read bank statements. Sadly a large portion of the population has no mathematical skills….

    In DPP v Manivel [2023] VCC 1617, the DPP had to pitch it as if the defendant was recklessly dealing with suspected proceeds of crime. For $350 that just comes into a random person's account, it would be very difficult to prove such offence in my opinion.

    That case can be read for free by clicking here at austlii.

    Furthermore, even if you find out who the recipient is, the filing fees and the administrative procedures you will have to go through will not really lead to a good outcome for your son. My gut feeling is you will lose to be honest, but I would need to do more legal research to come to a better idea since I am now retired.

    Note: I mixed the two criminal/civil issues together in a rush. I cannot at this point in time tell you exactly what type of action could be taken on the civil side. There should be a correlated civil action though.

    • trapper on 24/11/2023 - 10:35
      +2

      A lot of people think it is theft if someone keeps money but you need to prove the elements of the crime and here depending on who you talk to will probably state there is potentially no offence committed. Especially problematic is there might not have been mens rea and the recipient just pressed the money out from the ATM and lets just assume that person is on Centrelink.

      The receiver might have inadvertently spent the money, which, on its own, does not constitute an offense.

      However, upon being notified of the accidental transfer, the recipient acted deceptively in an attempt to retain the funds. This action transforms the situation into a case of theft.

      • Be careful on 08/01/2024 - 01:54

        Sending a letter doesn’t constitute notification as they may not have read it

  • Manegarda on 23/11/2023 - 17:19
    -4

    I can almost guarantee this is an error on the side of the employer. In fact I’m going to wager your sons Bank account STARTS with a 0. it’s a common error as many account numbers start with zero. When these numbers are initially put into excel it truncates the zero out. e.g copy and paste 09999999 into excel and it'll pop out as 9999999. Pretty common mistake that I faced all the damn time when transacting lots of bsb payment for an organisation that didn’t have any dedicated accounting software and manual calculations were done through excel.

  • Herbse on 23/11/2023 - 18:27

    tough luck

    Seems to cover the situation

  • Dontdoit on 23/11/2023 - 19:09
    +9

    Some unethical tips for you.

    Use the BSB and account info of the recipient and sign them up to direct debits, gym, charities in the street.

    When you get a scam SMS respond with the bank name, BSB and account number of the recipient.

  • HCBargain on 23/11/2023 - 19:23
    +2

    Is "Theft by Finding" an offence in SA? It is in Vic, and this is a pretty clear case of it.

  • lazarski on 23/11/2023 - 20:01
    +5

    I think the life lesson will be too harsh, if anything it teaches you not to work hard. This fiasco even if he gets the money back will teach him to double check.

    How can the other party just refuse to return the money? it is not their money, they are stealing it.

    If a bank/crypto exchange or institution incorrectly gives you money and you try to keep it, you are going to court.

    The software truncated the number and it went to someone else, honestly the system to just have 2 numbers to send a bunch of money is archaic.

    If the employer can't get the money back they need to pay your son again. He needs to be paid for the job he did, they did not even manage to pay to the number he gave them. They sent money to some other ACC

  • dlakers3peat on 23/11/2023 - 20:38
    +1

    People are scum!

  • Deals For Days on 23/11/2023 - 20:43
    +3

    People saying this is entirely the kids fault I disagree with. The employer didn't send the funds to the bank account provided. They truncated the account number provided!

  • HartyBarty on 23/11/2023 - 20:53

    Call the Australian Financial Compalints Authority, make a complaint

  • BlueGlass on 23/11/2023 - 21:38
    +1

    This is called a MIP, mistaken internet payment.

    You have two mistaken payments. Raising them with the financial institution ASAP is important. As you have identified less than 10 days get special treatment. Less than 7 months gets less than special treatment.

    The financial institution that has sent the funds and the financial institution that has received the funds are obviously very big players in this case. They All have different rules varying by reasonableness.

    You absolutely have a right to complain about this. Have a look at the rejection letter that you would have received. That is the base of your complaint.

    Just this year they introduced a partial MIP, for when full funds cannot be returned. This should help you a lot but it depends if the of the financial institution is playing by the new rules.

    I would suggest contacting your bank again and asking for a new case to be raised, linked to the old case. Depending on the financial institution, they may have done an account balance check just once in the entire case duration.
    Chances are the the funds have hit a corporate account or a hard to access account and the bank is just being lazy. You may need to ask for a trace request to be raised to understand where the funds have actually landed and then raise a mip case with the details from the trace case.

    • doczoid on 25/11/2023 - 00:42
      +1

      OP contacting the bank will do nothing, the company that sent the money needs to initiate the process

  • Fysh on 23/11/2023 - 22:10

    Go to financial ombudsman get them to help sort it out.

    • infinite on 26/11/2023 - 09:41

      The financial ombudsman will reiterate exactly what all banks warn you about in writing when making ePayments/Transfers (and also have in writing in their T&C's you must read and agree too) - the individual providing the BSB/Acc# is solely responsible for providing accurate information, as once the money is transferred, it's not the bank's responsibility if you gave them incorrect information.

  • 82norm on 23/11/2023 - 22:50

    Karma will get the person who won’t pay the money back, it always does.

  • john_conner on 23/11/2023 - 23:46

    Sure the employer could have checked it more thoroughly, but in the end the wrong details were supplied.

    “seems like a harsh punishment for a simple mistake”
    Well the lesson here is to triple check things which are going to be difficult / impossible to fix.

  • creesy on 24/11/2023 - 06:47
    +5

    If the person that received the money wants to be dishonest and not return the money ask that the employer report the matter to the police.

  • Punda on 24/11/2023 - 07:02

    Happened to me and I thought that e code of conduct was going to come into effect but nope, they just get to ignore it and keep it.

  • iNeed2Pee on 24/11/2023 - 08:17
    +2

    The fact that the person does not want to return funds which is not theirs is ultimately theft. Shame on those pos.

    • infinite on 24/11/2023 - 10:34

      On the flipside though, there's a lot of good bargains posted here currently they can use the free $350 on !

    • Be careful on 08/01/2024 - 01:55

      U all assume they got or read letter

  • CowFrogHorse on 24/11/2023 - 10:47

    Do they have gutter oil in the south american fast food busines ?

  • star-ggg on 24/11/2023 - 12:38

    https://www.theguardian.com/australia-news/2023/nov/24/austr…

    Looks like OP made enough noise!

  • ArskinF on 24/11/2023 - 12:39

    Glad to see the banks taking up the practice of ensuring account number & holder's name match:

    "institutions to crack down on scams by rejecting transfers if name and bank details of recipient don’t match"

    https://www.theguardian.com/australia-news/2023/nov/24/austr…

  • dm02 on 24/11/2023 - 12:41
    +8

    This thread really shows how poor reading comprehension is these days.

    The employee's actual bank account number is 123456789.
    The employee accidentally provided account no 1234056789.
    The employer paid the funds to account number 123405678.

    If the employer paid the funds to the account number that was provided, then I would agree that everything falls on the employee here (although the employer should still use best efforts to recover the money).

    However, in this case, the employer paid the funds to an account that the employee didn't provide. This is a fortunate mistake for the employee in that it gives the employer the responsibility to pay the funds to the employee's correct account number, and either:
    - have their bank recover the funds from the incorrect recipient, or
    - write it off as a loss

    • Camelface on 25/11/2023 - 10:07
      +1

      Reading comprehension in OB Forums? Hahahahahahahaha

      • dm02 on 25/11/2023 - 13:09
        +1

        yeah fair point hahahah

  • Willy Beamish on 24/11/2023 - 13:13

    If they are refusing to give the money back after being informed it was an incorrect payment then that is theft.

    Report to the police

  • tsunamisurfer on 24/11/2023 - 13:30
    -1

    The employee is at fault here by giving an incorrect number.

    You cannot turn around and say well if the company had paid to an invalid account I would have been OK.

    You don't jump off a building then blame others for not putting out a safety net.

    The odd thing is the recipient can actually say sorry its mine.

    We have heard multiple stories where people were inadvertently sent money not theres and they always say spending it is illegal. Why is this not illegal?

    • dm02 on 24/11/2023 - 14:36

      The employee gave the wrong number, but then the employer sent it to an account different to the one the employee erroneously provided.

      • infinite on 24/11/2023 - 14:53
        +2

        We don't actually know that. Accounting software does not truncate account numbers, so OP's claim in regards to that sounds dubious at best. It's common for banks to have account numbers anywhere from 6-16 digits long, so their software deleting an account number seems highly unlikely being that his account number was 9 digits and his error was giving them an account number with 10 digits. All we know for sure is that OP's son gave over the incorrect account details.

        • dm02 on 24/11/2023 - 16:14

          I agree that the OP's son gave the wrong account details, but —
          - We don't know the employer, or the software they use, or the bank
          - We don't know the employee
          - We don't know if the information the employer gave to the employee/their dad re the truncation of the last digit was true or not
          - There's no real reason for the OP to lie to us, a bunch of random internet people

          Based strictly on what they've said, in any case the employer should help get the funds back, but if the employer paid the funds to an account that is different to the one that was provided (whether the original one was incorrect or not) they have the responsibility to pay it back to the employee

          • infinite on 24/11/2023 - 23:23
            +1

            @dm02: No accounting software truncates account numbers, it simply allows you to enter an account number & associated BSB. 10 digits is not even close to the highest number of digits standard for bank accounts in Australia either.

            OP's son provided an incorrect account number to the employer. Nothing the business did could have flagged or prevented an issue arising from that. The responsibility for that is on OP's son.

  • rlf on 24/11/2023 - 16:19

    I have a couple of related questions to this.

    1. What is the purpose of the account name in transactions? They aren't used for confirmation. I've written entirely made-up names with correct account details, and the money successfully goes through (helps when wanting to stay anonymous).

    2. Why are account numbers not wholly unique instead of being unique to just a branch? This would solve a lot of issues where it's almost impossible to accidentally typo to an existing account.

    3. What is the actual law here? I've heard conflicting accounts where if you accidentally receive money in error it's yours but also you have to give it back? It there a $ threshold of some kind? Seems ridiculous the bank can't force someone to give it back, or is it mainly because it's out of the banks hands, now a civil matter between the two parties and the bank is under zero obligation to pass on their details to proceed with legal action?

    • Ryk on 29/11/2023 - 19:18

      What is the purpose of the account name in transactions?

      for the payer to identify who they are sending money to. It is not the name of the receiving account. so you know you are sending money to "Sideshow Bob", even if his real name (and account) is "Robert Underdunk Terwilliger Jr., PhD".

      Why are account numbers not wholly unique instead of being unique to just a branch?

      depends entirely on the bank's set-up

  • jayzee on 24/11/2023 - 16:52

    I've posted a similar thread 3 years ago here, that's a real story from a real friend.

    At the end, he didn't pursue further as he couldn't get the recipient's address, which bank didn't give out citing the privacy laws.

    It's an expensive lesson, so always double, triple check your BSB/Account Number when doing money transfer, and if time allows, do a small amount transfer first to verify all setup okay before proceed.

    And just let you know, if BANK made a mistake to transfer money to an unintentional recipient, and the recipient does not want to return the money. Is up to the bank to decide if it wants to pursuit further. The bank may need to decide whether the amount is warranted to spend additional resource and money to pursuit it, or just simply to write it off.

  • archieduh on 24/11/2023 - 17:54
    +1

    I just feel bad for your kid.

    If the BSB is the same, it has to be the branch, try and pursuade the branch manager to have a look at the other account if they have received those funds on those dates and see if they can reach out. Ask the bank manager if they have any options.

    And heck I would even go to the police.
    In this economy, $350 is a lot for a child.

  • bryans on 25/11/2023 - 08:03
    +2

    Good lesson for your son. Don't take payment instructions lightly and pay attention to detail.

  • matt_will_fix_it on 25/11/2023 - 09:56

    What happens if you send a small amount (1 or 2 cents) to the account your son provided (the full 10 digits)? Does it bounce back to your account after a few days?

    If it does bounce back, you could argue that the employer transferred to the wrong account. If they had transferred to the account supplied, their funds would have been returned.

    • infinite on 26/11/2023 - 09:37

      Transfers either work or they don't. The money doesn't leave your account unless the account at the other end exists and can accept the transfer.

  • [Deactivated] on 25/11/2023 - 10:54
    +2

    Isn't it illegal to keep money that was transferred to by mistake?

    I thought a couple in Victoria just got sentenced, because they were transferred like 10 million and spent it all.

    I just complained that the Dominoes, sounds ridiculous but the store when I paid in store charged me $0.09 extra.
    I thought it was interesting, because if you charge everyone nine cents extra and that's thousands of orders a week…. It can add up.

    • infinite on 26/11/2023 - 09:35
      +1

      Technically, yes.

      However, the authorities don't care about anything they consider to be low value soft crime like this, in the same way that they don't care about people who break the law over ideological issues they also side with as an institution. So your only recourse is asking the receivers bank to communicate with the person that was given the funds and asking them nicely if they'll return the money. If the person that has the money wont return it, you'll have to pursue them legally & that will cost substantially more in funds and time than the amount of money OP's son irresponsibly had transferred to a strangers bank account.

      On the upside, at least the result here is going to be a positive outcome, with OP's son learning an important life lesson in financial responsibility. They'll likely never make this mistake again, now.

    • viper8548 on 25/11/2023 - 18:33

      I also think its the bank that truncated and not the payroll software as the software have no way of knowing the account number limit of each bank

      • infinite on 26/11/2023 - 09:25

        Banks in Australia no longer have account number length limits. It's standard for banks now to have up to 16 digit long account numbers as just their base length - they can go higher if they want.

    • pennypacker42069 on 25/11/2023 - 20:57
      +1

      Are you sure banks are allowed to process payments where the account number is not exact match? That sounds like a really bad idea

      • infinite on 26/11/2023 - 09:27
        +1

        A bank will only transfer funds between exact account numbers provided to them. If all account numbers exist, the transfer will happen, if they don't, the transfer will fail & the sender of the funds will be notified.

    • infinite on 26/11/2023 - 09:23
      +1

      Banks don't truncate account numbers. An account number either exists and funds are transferred to it, or the number doesn't exist and the transfer attempt fails. If the attempt fails, all banks will give you an automated message stating it, every time.

  • Seraphin7 on 25/11/2023 - 18:32
    +2

    The problem commenced with the provision of incorrect details. In my experience, often the problem ends at the same place it commenced.

    Attempting to pin liability on others is a curious logical progression.

    • John Kimble on 25/11/2023 - 18:40
      +2

      Indubitably 🧐

    • Eeples on 26/11/2023 - 22:54
      -1

      And yet if you received a mystery $350 in your bank account and your bank asked you to return it…… would you?

      I am suggesting the problem here is also with the person who received the $350, money that they are not entitled to, refusing to return it.

      • infinite on 27/11/2023 - 21:52

        Most people wouldn't even acknowledge the bank's notice, let alone respond to it or return the money.

        • Eeples on 28/11/2023 - 20:53
          -1

          I disagree.

          Perhaps you should speak only for yourself. And not ‘most people’.

          • infinite on 29/11/2023 - 15:37
            -1

            @Eeples: Yet here we are, with most people doing exactly what I said……….. which is literally what has also happened to OP's son.

            Seems like you need to stop with the wishful thinking and start discussing reality with the rest of the adults.

            • Eeples on 29/11/2023 - 17:56
              -1

              @infinite: I can assure you if $350 was put in my bank by mistake I would return it.

              And I would be surprised if most ppl here would not do the same.

              I would have actually thought that does make me an adult.

  • yummycoot on 26/11/2023 - 16:58

    Contact ATO and get them to tax the incorrect recipient.

    • infinite on 26/11/2023 - 22:54
      +1

      How?

      The recipient was gifted the money.

      • AlienC on 28/11/2023 - 08:43

        Did we just find a tax loop?

      • Eeples on 28/11/2023 - 20:55
        -1

        It was obviously not a gift.

        • infinite on 29/11/2023 - 15:35
          -1

          OP's son literally instructed his employer to give the money to someone else though, by giving them a BSB & Acc # that wasn't his……….

          • Eeples on 29/11/2023 - 18:00
            -1

            @infinite: Yes, it was a mistake.

            A gift needs to be willingly given. This was not.

            Ie. There was no intent to make a gift.

            • infinite on 29/11/2023 - 21:30
              -1

              @Eeples: OP's son willingly gave the BSB and Acc#, with instructions to pay money into it and acknowledged it was the correct account to pay the money too at the time…….. He may have realised after that he himself made a mistake in the account number used, however the instruction he gave at the time were to do it. So what's done is done, now.

              • Eeples on 29/11/2023 - 21:47

                @infinite: … ie. not a gift. The son's intention was not to gift away his pay purposely.

                • infinite on 30/11/2023 - 21:12

                  @Eeples:

                  The son's intention was not to gift away his pay purposely.

                  Yet, that's exactly what he did …………

                  • danjerman on 07/01/2024 - 19:14

                    @infinite: …and yet they gave it to someone else with a different bank account number….

  • burningrage on 27/11/2023 - 10:03
    +1

    No OP update I see.

  • [Deactivated] on 27/11/2023 - 11:35
    +2

    Well the value is $350, in South Australia to file a small claim in the small claims court I think is around $150.

    So as much as it's a valuable lesson, I would still file a small claims in the small claims court because I assume that person is going to have to represent themselves in court in front of a judge and offer reasoning why they won't return the money.

    If you file a small claims court the proper way, you will get reimbursed for the $150 or whatever the cost if you win as well.

    So you don't need to seek expensive legal action for such a small claim, you can still file a small claims and that person will get notification and have to make a decision if they want to go to court over $350 or simply return the money.

    • infinite on 27/11/2023 - 22:03

      Good luck with that. The banks can't hand over the recipients information in this scenario due to privacy laws. There is no recourse through the bank as OP's son made the mistake in the first place of providing an incorrect Acc#, which means the fault is on them. The police won't take any action over an insignificant amount of money like this, they have no clue or ability to tell if OP's story is even true, or just a scam attempt. So OP & their kid who is at fault have no capacity to claim against anyone in small claims court, as they'll have no ability to obtain the recipients information to even present in small claims court. They'll have to go and pay for legal advice & then a lawyer to advocate on their behalf in an attempt to get a court order for the information - at which point they'll already have spent 5x the amount OP's kid gave away in the first place in legal fees - before they even get to court. A hearing for the case in small claims court depending on how backed up they might be could be a year or more away, too.

      You'd have to be a complete and utter peanut to waste all that time and money, when you could just turn a negative into a positive instead and write this off as an extremely valuable life lesson in financial responsibility that the kid will never forget.

      • Eeples on 30/11/2023 - 15:06
        -1

        And you would have to be scum when told by your bank of the claimed incorrect EFT transaction into your account and you decide to lie and claim that you were in fact entitled to that money.

        The kid will learn that some people are scum. Perhaps that is a valuable lesson anyways.

        • infinite on 30/11/2023 - 21:14
          -1

          The kid will learn that some people are scum. Perhaps that is a valuable lesson anyways.

          It seems both you and OP are learning something today.

          Nice.

  • danjerman on 07/01/2024 - 19:13
    +3

    Thanks for all your comments and feedback. I thought I'd give an update. It took a while to sort out and a few emails. The company eventually decided to pay my son the monies owed. I'm not sure if they will continue to chase the bank to get the money returned to them.
    The arguments presented were that despite the mistake originating form my son, the company did not actually pay any money to the account number he supplied. They paid money to a different unrelated shortened account number.
    This thread (https://www.ozbargain.com.au/node/824826) prompted me to give an update and I was so pleased to see the OP say they tried to contact the bank to say they had received some erroneous money. This is unlike the utter scumbag thief who refused to give the money back even when the bank asked for it in our little saga here.
    Thanks again all

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