A bank error, even in your favor, is never a good thing. Either way, it takes days, and sometimes weeks, to resolve. “Mostly, these types of errors are due to clerical mistakes or faulty technology,” says Justin Pritchard, a certified financial planner and About.com banking expert. Here are the steps you should take when handling a mistake.
1. Contact your bank. If you don’t see money in your account that you know you deposited, get to your bank right away and ask to speak to the bank supervisor. You’ll also need to follow up with a letter documenting the situation. The same applies if the error is in your favor. In general, errors must be reported within 30 to 90 days from the bank statement date. When it comes to an electronic funds transfer, you have up to 60 days. In the case of loss due to a fraudulently endorsed check, you have up to one year. Time frames may vary, so check with your banking institution.
2. Don’t try to resolve the problem on your own. If a check was mistakenly deposited into your account, and you see the intended recipient’s information on a copy of the check image, don’t attempt to contact him or her directly to fix the error. “Never contact a customer on your own,” says Patricia Nelson, vice president of retail banking at City National Bank of New Jersey. “You should let the bank deal with the issue. A lot of those issues are bank-to-bank and not client-to-client. Also keep in mind that there’s a time limit. So if you’re going back and forth with the other customer, you might miss the deadline.”
3. Don’t spend the money. If you spend the money, you’ll have to pay it back. It’s not yours and the bank will not let you keep it. And if you don’t say anything about the error, you could face criminal charges. “There are anecdotes where people have tried to get the money to its rightful owner, and the bank didn’t respond and no one came to claim the money,” says Pritchard. “After a couple of years, odds are slim that someone will come for it, but it still wasn’t your money and you have to expect that someday someone might come and ask for it. It’s best to play it safe and do everything in your power to notify the bank.”
4. Document everything. Take note of the names of bank representatives you speak to, what they say, and when they say them. “You want to be able to document that you’ve been acting in good faith and that you are not trying to deceive anybody or steal someone’s money or defraud the bank. You want to show that you’re really trying to do the right thing. The more details you have, the better you can make your case,” says Pritchard.
5. Don’t transfer the money. You might be tempted to transfer the money to a savings account so that you can earn interest. Bad move. The bank will need access to the money so that it can move it to where it belongs. The bank also needs to conduct an investigation to see how the error occurred. Moving the money will delay the process and cause confusion.
6. Request compensation. If a mistake involving an electronic funds transfer is not in your favor and the bank determines that it will take more than 10 business days to resolve your case, the bank is required to temporarily reimburse your account. (However, the bank will take the money back if it determines that you are responsible for the error.) In addition, request that the bank cover any late fees incurred if the matter involves a bill.