What would you do if you discovered that your bank had accidentally extended you 100x more credit than you were approved for? Would you transfer it to your savings account and leave the country?
That’s exactly what a New Zealand couple did in 2009 when they discovered their bank had approved them for a $10, 000, 000 credit line. Not surprisingly, they’ve since been arrested and are being prosecuted for their mis-deeds.
Admittedly, this is a pretty extreme (an convoluted) case. What started out as a simple error was compounded when the recipients decided to take the extra step and turn it into credit fraud.
But what about a more straightforward bank error. For example, you deposit $100 and you somehow get credited for $1000. Is this like the old Monopoly card? Do you get to keep the cash?
Sadly — for you, but happily for the bank and its shareholders — the answer is “no”. Bank errors in your favor aren’t a windfall, and they can turn out to be quite a hassle. Just think… You spend the money down, the bank corrects the error, and a bunch of checks bounce.
And guess what? Banks typically have a long time to correct such errors. The exact rules vary by state, but we’re talking years. And they don’t have to ask your permission or even notify you before doing so.
What about errors in the banks favor? Same deal. You’re entitled to have them reversed. But here’s the catch… Following the date the statement containing an error was sent, you have 30 days (for paper checks) or 60 days (for electronic transactions) to report such errors. After that, you’re relying on the good graces of your bank to rectify the situation.
Oh, and for the record… The same general rules apply to erroneous tax refunds — if it’s not actually your money, you can’t reasonably expect to keep it. In general terms, if you receive a deposit that you’re not expecting, don’t go spending it until you’ve investigated and confirmed that you’re actually entitled to the money.