What would you do if you got an SMS alerting you that a sum of money had been deposited into your account; a deposit you knew was not due to you?
Would you keep the money, telling yourself it was obviously “meant to be” or “a gift from God” because you need the money so badly, or would you alert your bank to the error, and ensure that the money got to the intended account?
When a radio presenter posed a similar question recently, I was appalled to hear caller after caller say they’d keep the money, with a variety of creative justifications, including “that stupid person’s loss is my gain”.
Not so stupid, actually – forget matching account names and branch details – all it takes for a transfer to happen is for the number in the account field to be a valid account of the selected bank’s.
Get just one digit of the account number wrong and your money will end up in a wrong account.
Many desperate consumers have contacted me over the years, having made such a mistake and then been told by their bank that the unintended recipient of their money was not prepared to give it back. Or had spent it all.
Clearly, if you choose to keep money despite knowing it was not intended for you, that’s a form of theft. It’s called unjust enrichment.
But what of the banks’ role?
On its website, the Payments Association of SA states that in such cases, “the paying customer has the right to the return of these funds through the rule of unjust enrichment, and the banks will assist him or her where possible to affect such recovery.”
In the most recent case I investigated, the bank concerned told me that if the recipient decided to keep the money, it could not reverse the payment, and costly, lengthy legal action would be the payer’s only option.
Last week at the launch of the Ombudsman for Banking Services’ (OBS) annual report, I asked Ombudsman Clive Pillay what his office expected banks to do in such cases.
The banks can’t just take the money from the “wrong account” and return it to the payer’s account, he said, because in some cases, the payer’s motives were not pure.
What his office does advice is that the bank removes the disputed amount and places it into a suspense account until the matter can be resolved.
So that’s another reason to keep a sharp eye on your bank statement. The sooner you realise your mistake, the greater the chance something can be done before a morally challenged recipient spends the “gift”.
ATM cases dominated the OBS’s caseload last year – 37% of cases – more than half of them involving card swapping. That’s when fraudsters “shoulder surf” a potential victim as they’re entering their PIN at an ATM, then distract them as their card emerges from the machine – in a case last week, a man dropped a R200 note – and then snatch the card, replacing it with another.
In 80% of the ATM cases, the Ombud found in favour of the bank, because if you compromise your PIN by allowing someone to get close enough to see you entering it, or allow someone to “help” you at the ATM, the bank won’t be held responsible for any loss you suffer as a result.
One of the case studies in the OBS report is another take on the theme of consumers spending money they know they’re not entitled to, or won’t be able to pay back. The OBS tagged it:
Reckless lending, feckless spending
The complainant’s overdraft limit was R10 000, but he accessed more than 10 times that – R100 000 – because of a system error at the bank, via ATM cash withdrawals and debit card payments.
Then he accused the bank of reckless lending – extending someone’s credit limit without doing an affordability assessment is, in terms of the National Credit Act, reckless lending, and a credit provider can be ordered to write off the “reckless” spending.
In this case, the OBS said it couldn’t overlook the fact that the complainant had used and benefited from the funds, knowing that he had exceeded his overdraft limit tenfold.
So it decreed that he repay the money, but the bank should write off its fees and interest, and the bank agreed.
Loan remorse
A similar scenario featured in the case studies of the Credit Ombud’s 2015 annual report, released on Friday.
“Ms Naidoo” was granted four loans by one lender, with a total repayment instalment of R4500.
“She immediately realised that it was too much for her to keep up with payments, especially as she was already repaying other loans via an emoluments attachment order or “garnishee order”.
So she turned to the Credit Ombud for help. Adjudicators concluded she could never afford the repayments and thus the loans had probably been granted recklessly.
They negotiated with the lenders which agreed to write off “substantial amounts” in service fees and interest, saving Ms Naidoo R117520.
Moral of the story: Don’t kid yourself – spending money that’s not yours to spend, or you have no hope of repaying, with interest, seldom ends well.
Spending cash that’s not yours seldom ends well
Would you keep the money, telling yourself it was obviously “meant to be” or “a gift from God” because you need the money so badly, or would you alert your bank to the error, and ensure that the money got to the intended account?
When a radio presenter posed a similar question recently, I was appalled to hear caller after caller say they’d keep the money, with a variety of creative justifications, including “that stupid person’s loss is my gain”.
Not so stupid, actually – forget matching account names and branch details – all it takes for a transfer to happen is for the number in the account field to be a valid account of the selected bank’s.
Get just one digit of the account number wrong and your money will end up in a wrong account.
Many desperate consumers have contacted me over the years, having made such a mistake and then been told by their bank that the unintended recipient of their money was not prepared to give it back. Or had spent it all.
Clearly, if you choose to keep money despite knowing it was not intended for you, that’s a form of theft. It’s called unjust enrichment.
But what of the banks’ role?
On its website, the Payments Association of SA states that in such cases, “the paying customer has the right to the return of these funds through the rule of unjust enrichment, and the banks will assist him or her where possible to affect such recovery.”
In the most recent case I investigated, the bank concerned told me that if the recipient decided to keep the money, it could not reverse the payment, and costly, lengthy legal action would be the payer’s only option.
Last week at the launch of the Ombudsman for Banking Services’ (OBS) annual report, I asked Ombudsman Clive Pillay what his office expected banks to do in such cases.
The banks can’t just take the money from the “wrong account” and return it to the payer’s account, he said, because in some cases, the payer’s motives were not pure.
What his office does advice is that the bank removes the disputed amount and places it into a suspense account until the matter can be resolved.
So that’s another reason to keep a sharp eye on your bank statement. The sooner you realise your mistake, the greater the chance something can be done before a morally challenged recipient spends the “gift”.
ATM cases dominated the OBS’s caseload last year – 37% of cases – more than half of them involving card swapping. That’s when fraudsters “shoulder surf” a potential victim as they’re entering their PIN at an ATM, then distract them as their card emerges from the machine – in a case last week, a man dropped a R200 note – and then snatch the card, replacing it with another.
In 80% of the ATM cases, the Ombud found in favour of the bank, because if you compromise your PIN by allowing someone to get close enough to see you entering it, or allow someone to “help” you at the ATM, the bank won’t be held responsible for any loss you suffer as a result.
One of the case studies in the OBS report is another take on the theme of consumers spending money they know they’re not entitled to, or won’t be able to pay back. The OBS tagged it:
Reckless lending, feckless spending
The complainant’s overdraft limit was R10 000, but he accessed more than 10 times that – R100 000 – because of a system error at the bank, via ATM cash withdrawals and debit card payments.
Then he accused the bank of reckless lending – extending someone’s credit limit without doing an affordability assessment is, in terms of the National Credit Act, reckless lending, and a credit provider can be ordered to write off the “reckless” spending.
In this case, the OBS said it couldn’t overlook the fact that the complainant had used and benefited from the funds, knowing that he had exceeded his overdraft limit tenfold.
So it decreed that he repay the money, but the bank should write off its fees and interest, and the bank agreed.
Loan remorse
A similar scenario featured in the case studies of the Credit Ombud’s 2015 annual report, released on Friday.
“Ms Naidoo” was granted four loans by one lender, with a total repayment instalment of R4500.
“She immediately realised that it was too much for her to keep up with payments, especially as she was already repaying other loans via an emoluments attachment order or “garnishee order”.
So she turned to the Credit Ombud for help. Adjudicators concluded she could never afford the repayments and thus the loans had probably been granted recklessly.
They negotiated with the lenders which agreed to write off “substantial amounts” in service fees and interest, saving Ms Naidoo R117520.
Moral of the story: Don’t kid yourself – spending money that’s not yours to spend, or you have no hope of repaying, with interest, seldom ends well.
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