Banks sometimes get things wrong. Here's what to do if it happens to you

In June of this year, a Pennsylvania couple’s bank account balance unexpectedly jumped from a modest $1,121 to a whopping $121,121.

Robert and Tiffany Williams were surprised to see $120,000 deposited into their bank account — especially considering that $120,000 wasn’t theirs. 

And yet, in the span of two-and-a-half weeks, the two spent the money on a camper, a car trailer, a race car, and put a downpayment on a Chevrolet SUV. They also used it to pay bills, and gave away $15,000 to friends in need.

As it turns out, an employee at their bank accidentally entered the wrong deposit information. The money was supposed to go into the account of Dimension Covington Investment LLC. As soon as the bank discovered the error, they tried to withdraw the $120,000. This sent Robert and Tiffany’s account into an overdraft balance of $107,416.

This is a rather wild story. But at the heart of it is one mundane truth: sometimes, banks flub things. And it doesn’t have to be as extreme as depositing $120,000 into the wrong account, either. It can be as simple as an ATM spitting out only four $20 bills when you requested $100.

But in order to avoid any serious penalties, what should you do in situations where the bank makes an error?

We thought that’d be an easy question to answer. But in reaching out to various financial regulators, consumer protection agencies, and banks, it quickly became clear that each had a different idea of which organization would best be able to answer this question, none fully answering it themselves.

1. Regularly comb through your statements and accounts

The most effective measures you can take to safeguard your money and not wind up in a banking mixup are preventative.

Keep an eye on your bank and credit card statements and watch your accounts for irregular activity. If you notice any funny business, such as unauthorized withdrawals, get in touch with your bank and any other appropriate parties.

Customers who notice unusual deposits should not assume that the money is theirs

“It’s a good practice for consumers to regularly check their bank statements for any transaction they didn't make or approve,” said Lynne Santerre, media relations strategist at the Financial Consumer Agency of Canada (FCAC), in an email. 

“Should they find a transaction they don’t recognize, consumers should contact their bank immediately and follow the instructions provided by their bank.”

2. Contact your bank to let them know what’s happened

“Banks have no higher priority than the security of their customers' money and conduct comprehensive investigations of all fraud cases,” said Mathieu Labrèche, director of media strategy at the Canadian Bankers Association, in an email. 

According to the CBA, which is an advocacy organization that focuses on industry-wide issues and public policy matters, instances of incorrect deposits or withdrawals are very rare in the Canadian banking sphere. 

Of course, if they do happen, the bank will likely need to launch an investigation. 

“Once the bank has gathered the necessary information regarding an erroneous withdrawal, they can reverse the transaction and credit the funds back to the customer,” said Labrèche.

Banks will also have a complaints process in place that consumers can use if necessary. 

3.  Don’t spend any money that isn’t yours

It’s oh-so-tempting but don’t be like Robert Williams and his wife. Spending money that’s not yours is akin to stealing it. The two were charged with theft and receiving stolen property (treated as felony charges in the U.S.), and later released on $50,000 bail.

Should they find a transaction they don’t recognize, consumers should contact their bank immediately and follow the instructions provided by their bank

“In the very unlikely circumstance that money has been deposited into a wrong account, the bank in question would reverse the transaction and credit it to the correct account,” said Labrèche.

“Customers who notice unusual deposits should not assume that the money is theirs.”

4. One final takeaway 

When we reached out to each of the major banks (Scotiabank, TD, BMO, and CIBC) for this story, no one made themselves available for comment, and CIBC deferred to CBA. The only responses we did receive — from the CBA and FCAC — are in this story. Consumer protection agencies in B.C. and Ontario both pointed us to FCAC and to the banks themselves for answers.

It’s clear that this isn’t something banks are used to dealing with and may not even want to deal with. In recent years, banks have walked away from the fully independent resolution body OBSI — the Ombudsman for Banking Services and Investments. OBSI is designed to mediate disputes with banks and their customers, but now only BMO and CIBC are part of it. Scotiabank walked away last year, and TD and RBC were among the first banks to drop out years ago.

While there have been calls for the government to step in and force the banks to be part of an independent dispute body, that’s currently not the case. 

If you find yourself in a situation where the bank has made a mistake and isn’t addressing your concerns, we recommend you reach out to Ellen Roseman, a consumer advocate who recently joined LowestRates.ca as a monthly columnist. She’s always willing to listen to consumer complaints and, where she can, step in to help find a resolution.