Oh no! You meant to pay your car insurance bill, but got the account details wrong and the money went to the wrong account! What do you do now?
It used to be pretty hard to do this a few decades ago, where you used to have to walk into a bank itself or physically hand a cheque to someone in order to pay them the money you owe. But both cheques and bank branches are going out of fashion fast – now it’s all about fast online payments via your bank’s app, website or by BPAY.
To transfer money to someone online you generally need a couple of the following things:
- Their BSB number (usually six digits)
- Their account number (usually up to 10 digits)
- Their mobile number of email address (if they have payID)
While this can definitely make paying someone easier, it can create more opportunities to make a mistake. Just one digit out of place can lead to you paying someone else, someone who could be a complete stranger.
According to ASIC figures from 2015, 83% of mistaken transactions were due to people incorrectly entering the bank details of their intended recipient.
A bank accidentally deposited $120,000 in a couple’s account. They spent most of it, then got charged with theft. https://t.co/FL8lkazp2T— The Washington Post (@washingtonpost) September 8, 2019
This could be a small amount like $5, but in some cases this would be hundreds if not thousands of dollars, not an amount most people wouldn’t miss if it went to the wrong person. So what do you do? Panic? Curse and call yourself an idiot?
Well, no, you shouldn’t panic, and you’re probably not an idiot. As long as you stay calm and follow these simple steps, recovering money you’ve sent to the wrong bank account is actually very easy.
Ask the person (if you know them)
First thing’s first, there could be a much simpler solution if you’ve accidentally sent money to a friend, family member, colleague etc. Mistakes happen, and if they’re a decent person they should return the money to you promptly. This can help you avoid the steps we’ll go through below.
However if they’re not a decent person, or:
- you don’t know them (or might be too awkward to ask)
- you’ve sent the money to the wrong financial institution or company
…then you’ll have to actually contact the bank, unfortunately, and the sooner you can do it the better. There are three different scenarios listed by the Financial Ombudsman Service Australia (FOS) that can influence how easily you’ll get your money back:
- If it’s been less than 10 business days (easier)
- If it’s been between 10 business days and 7 months (harder)
- If it’s been over 7 months (hardest)
It’s been less than 10 business days
The Financial Ombudsman states if you contact your bank and make a claim within the first 10 business days of the transfer, you’ll have the money returned to you in full. The bank will need to confirm with both yourself and the recipient’s institution that the transfer was genuinely a mistake first, so the sooner you contact them the better.
It’s been between 10 business days and 7 months
Things get a little trickier and a fair bit slower if you wait more than 10 business days to report the transaction, but you should still be able to get the money back in most cases.
If you make a claim on lost money between 10 days and seven months after, the Ombudsman states the recipient’s bank is obligated to freeze the disputed money and to notify the recipient of this. The recipient then has another 10 days to prove whether the funds are actually theirs or not, which can obviously get very messy as people don’t like to be parted with free money.
If they don’t prove the money is rightfully theirs (which they shouldn’t be able to if the money was genuinely sent by accident), then the money will be returned to you.
It’s been over 7 months
If you’ve somehow only noticed the money is missing seven months after the initial transaction (and if you’ve waited this long, you might not have really missed it that much in the first place), then things can get even harder. According to both the Ombudsman and ASIC’s ePayments code, neither the bank nor the recipient is under any obligation to return the money to you unless they agree to.
The funds will only be returned if the other person agrees to it, but don’t rely on this happening as not everyone is your friend. Make a claim on your lost money as soon as possible.
How to contact your bank after a mistaken transaction
When contacting your bank, have the date of your transaction, the amount transferred and the account details of the recipient handy so they can respond as quickly as possible. You can contact them by dropping into the nearest branch (if one exists) or by calling or emailing their customer service team, which they should have.
That ePayments code (referenced earlier) protects Australians from mistaken transfers. According to the code, the bank must endeavour to return your money to you as long as you notify them within 10 days, but they also have a right to determine if you’re ineligible to receive the money in certain situations. Payments made with BPAY are not covered under the code.
According to ASIC, you may not be eligible to receive the money if you:
- acted fraudulently
- didn’t take the necessary steps to keep your PIN or password secret
- left your card in an ATM
- unreasonably delayed telling your provider for any reason
This doesn’t guarantee you won’t get your money back but it might just harm your chances, and they won’t return money that was sent for illegal purposes. But if you feel you’ve followed all the rules and you feel your bank still isn’t helping you to fix the mistaken payment, you can lodge a dispute with the Financial Ombudsman Service Australia.
Unauthorised credit card transactions
Unauthorised credit card transactions are a different beast than transfers made from your bank account since the money isn’t actually yours. It’s the bank’s money at first before you have to pay it off.
Credit card fraud grew by 4.5% to $565 million in the 2017-18 financial year, and ASIC states the majority of unauthorised credit card transactions are card-not-present fraud, which occurs without the use of the physical card, mainly online or over the phone.
In most cases, you’ll be given a full refund by your credit card provider if you report the fraudulent transaction as soon as possible, and you should also freeze or cancel the card in the meantime to avoid being stung by further transactions. Debit cards are limited to what’s in your bank account, but someone with access to your credit card can spend up until your credit limit.
What if you receive money you weren’t expecting?
While you might think you’ve won the proverbial jackpot if a lump sum appears in your bank account from an account you don’t recognise, remember the old saying: if it seems to good to be true, then it probably is too good to be true or whatever.
That money isn’t yours and you’ll need to send it back and intentionally spending it isn’t legal. If money is incorrectly transferred into your account, you should notify your bank.
How to get by in the meantime
Let’s say you’ve accidentally sent money to the wrong account, or you’ve accidentally entered an extra ‘0’ in there and have sent $10,000 instead of $1,000. That could be all your money gone, and while you can get it back, you’ll still probably have to wait a couple of days before you get the money back.
Here are some short-term solutions you can employ to get by until your precious money is returned to you.
Avoid overdraft fees by contacting your bank
When your bank account goes into the negatives you can be charged an overdraft fee, although there’s now plenty of competition among bank accounts that charge no overdraft fees at all.
We continue to experience a issue with our network this afternoon that's affecting banking services. We're very sorry for the inconvenience and are working to fix it, it's likely to be some hours before services are restored. All accounts are safe https://t.co/mqJe94qXDN— CommBank (@CommBank) October 17, 2019
Overdraft fees can be in excess of $10, which might not seem like much but it would definitely feel like you’re being kicked while down. When contacting your bank about the misplaced money, inform them of your situation and they’ll probably waive any overdraft fees your account charges.
Consider credit options
Buy now, pay later platforms (BNPL), credit cards and even small personal loans can be used to get you by temporarily until you get your cash back, but there are caveats to using these products:
- BNPL can have small credit limits and charge late fees
- Credit cards can be massive debt traps and can charge high interest rates if you don’t pay them off in full each statement period
- Personal loans can also have high interest rates and it can be hard to separate the trustworthy lenders from the predatory ones
These products aren’t perfect by any means but if you get one that suits you they can be handy short-term solutions, at least until you get your finances back on track.
Have some emergency savings built up
Obviously this won’t be helpful if you don’t have any emergency savings, but having at least three months’ pay worth of emergency cash can be really helpful for situations such as this.
A new report has found that one in five of us don't have any savings and are leaving ourselves with little or no money to fall back on in case of an emergency. Does this surprise you? #9Today pic.twitter.com/okBllUZaHR— The Today Show (@TheTodayShow) April 22, 2018
According to BT Financial Group’s consumer index, 21% of people have no savings to fall back on. A similar study by Citi found that 36% of people had less than $1,000 in savings for emergencies, with one in 10 immediately facing the prospect of going into debt to pay for things.
Read our tips on setting up and maintaining an emergency savings buffer so you’re prepared in the event you accidentally transfer most of your money away.
Savings.com.au’s two cents
Accidentally sending money to the wrong bank account isn’t the end of the world, as long as you keep calm and promptly contact your bank to get it sorted. There are codes and processes in place to protect you in situations like this.
To avoid this situation, make sure you very carefully enter the receiving account’s details and double-check them before hitting send, whether it’s the account number, the BSB or the PayID (the account name generally doesn’t matter).
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