'Bank error in your
could mean 'Go directly to jail!'
the right thing, our conscience begs.
And we typically do: deciding not
to fight over that parking space at the mall or returning a lost
wallet to the police station.
But when large amounts of cash are involved
-- money not belonging to us -- we hesitate, procrastinate or, worse,
end up keeping it.
money, lost freedom
That's what recently happened to an AmSouth
Bank customer in Alabama. After the bank mistakenly credited
his account with $1.6 million, Roger Dudley, 21, went on a immediate
shopping spree: He paid off his truck and credit cards, bought 7,000
shares of AmSouth's mutual funds, bought expensive jewelry and airline
tickets for his wife, and quit his job at a hardware store.
Days later, reality set in and now Dudley is
facing federal charges that could mean jail time if he doesn't pay
the money back.
This type of bank mishap is not as rare as you
might think. In the past two years, a number of financial institutions
surprised customers with windfalls of money:
- Last year, a legally blind customer at
American Security Bank in Louisiana spent $21,000 the bank mistakenly
placed in his checking account. The customer thought the money
was from a Social Security benefit adjustment. The bank has
since dropped criminal charges but the customer still has to
pay the money back.
- When a Barnett Bank customer in Florida
checked his statement one morning two years ago, he noticed
the bank had transferred $400,000 from his Swiss bank account.
After verifying with both banks that this was a legitimate transfer
(both banks said yes), he converted the $400,000 to a cashier's
check and used the money to set up an annuity for his wife.
The bank sued but the customer claimed he couldn't pay it back
even if he wanted to because the money was set up as an irrevocable
annuity, meaning no withdrawals could be made. The customer
has been ordered by a judge to pay the money back plus triple
damages amounting to an additional $800,000 and attorney
fees for both sides.
- The conscience of a Lexington Postal Credit
Union customer got the better of her last fall and she returned
the $174,825 that was accidentally credited to her checking
account. After asking the credit union to transfer $175 from
her account in Lexington, Ky. to her account at a bank in Columbus,
Ohio, something went wrong with the electronic wire transfer.
It took three phone calls to the credit union, the bank and
the Kentucky Corporate Federal Credit union, the middleman,
before the matter was resolved.
- A man in Clovis, Calif., just wanted to
exchange some Japanese yen for U.S. dollars. He went to a Wells
Fargo branch last year to exchange 8,000 yen, which is $64 in
American money. The teller handed him $4,089.07 in cash. To
be sure, he asked the teller to recheck her figures and she
said that the amount was correct. The customer went home, waited
48 hours and when he didn't hear from the bank about the error,
the spending began. The man is not a Wells' customer but his
elderly mother (who also lives on Social Security and is a diabetic)
is, and within a week the bank discovered the mistake and took
the money from her savings account. In an unexpected move, the
bank "reversed" her account and returned her money, saying the
teller "did not follow procedures." Meanwhile, the son was ordered
to pay the money back through a monthly repayment plan.
So, the message is silver-dollar-shiny-clear:
Any money that is accidentally credited to your account must be
given back, says Douglas W. Roeder, deputy comptroller of large
bank supervision at the Office
of the Comptroller of the Currency, the Washington agency that
Roeder adds there are rarely any exceptions
and most banks will proceed with federal and criminal charges if
you don't pay it back.
"Every bank is different," Roeder says. "We've
even heard of some banks rewarding customers with a small portion
of the money for speaking up."
"Oh, only a couple hundred dollars, but it's
better than nothing."
The cynics might argue that banks are being unfair in their
demand for their misplaced cash. Accidentally bounce a check and
a bank may hit you with a $30 insufficient funds fee for each check
it has to cover. Customers are also penalized for calling customer
service too many times or mistakenly talking to a teller.
The point? "Banks will slam you and slam you
again if you make one mistake," says Ed Mierzwinski, consumer program
director of the US
Public Interest Research Group, a consumer advocacy group in
Washington. "But you're expected to smile and look the other way
if they goof up."
No one can really explain why banks err. Lately,
bank merger activity has spurred lost deposits, statement errors
and ATM snafus. But it can be as easy as a teller typing the decimal
point behind the wrong zero or a glitch in an electronic wire transfer.
count on mistakes
About $250 trillion was moved in 85 million wire transfers last
year, according to the Federal
Reserve, which operates
the Fedwire electronic funds transfer system. Still, with that barrage
of cash changing banks, states and hands, "there are very, very
few errors made in wire transfers," says Elliott McEntee, president
of the National Automated
Clearing House Association, an industry group in Herndon, Va.,
that develops rules for electronic payments. In most cases, errors
are discovered and corrected, and the customer never knows it happened,
If you happen to be among the unsuspecting people
who goes to check your balance, notices the additional zeros after
the comma and quietly starts strategizing your spending spree, think
of the consequences. We grudgingly offer these steps to follow should
you hit the temporary lottery:
- Call the bank or credit union immediately
and report the addition.
- Don't rely on a teller to fix the problem.
Deal directly with the branch manager -- and be sure to get their
- Get something in writing verifying the day
the correction was made -- signed by a branch manager.
- Check your account to make sure the correction
was actually made.
- Don't even think about keeping the money
-- you could go to jail and you will have to pay back every cent.
-- Posted: Aug. 31, 1999