Bank not liable for $35,000 customer accidentally sent to wrong person

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Bank not liable for $35,000 customer accidentally sent to wrong person

Categories:

Mistaken payments,

Summary:

In November 2022, Petra made a payment of $10,000 intended for her son’s company account to another person who had been a previous payee. Petra failed to notice she had accidentally inserted this person’s details as the recipient when making the payment. She made the same mistake twice more, sending another $10,000 in December 2022 and $15,000 in February 2023. When she realised her mistake, she asked the recipient to return the money. He refused.

Petra asked the bank to compensate her for the loss, saying the mistake would have been prevented if the bank had matched the account name and number. She also said the bank failed to tell her it did not carry out such checks. Furthermore, she said the recipient had his account at the same bank as Petra, so the bank should have detected the transactions as suspicious.

Published:

November 2024

Our investigation

The bank’s terms and conditions said it did not take steps to verify customers’ instructions, and that customers were responsible for the accuracy of the informationthey provided. The terms and conditions also said the bank was not liable for any losses caused by customer errors. This meant Petra was liable for the transactions unless she could demonstrate the bank had acted negligently.

We considered the bank had not acted negligently by not checking the accuracy of the payment instructions. We recommended the bank should provide a clear and timely reminder to customers about their responsibility to check the accuracy of the information they provide.

We did not have the power to consider Petra’s complaint regarding the recipient of her funds because we can consider a complaint only from a person who received (or failed to receive) a service from a bank, not about a service provided to someone else.

Outcome

We did not uphold Petra’s complaint, although we shared our recommendation aboutreviewing how banks communicated the fact they do not match account names and numbers with all other banks.

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November 2024

Mistaken payments /