Bank mistakenly applied father's preauthorized credit card payments to my account

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Aug 5, 2018
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#1
Hi all. I am in Ontario, Canada and am having a bit of an unusual problem. I am hoping for advice on how to handle this situation.

I recently noticed that a large payment was applied to my PC Financial Mastercard that I did not recognize. I called the bank, and they told me it was a preauthorized payment from my bank account that I had set up, and that I had sent them a form authorizing it about 3 years ago. I never sent them any such form.

I went back through my statements and found that over the past few years every 2nd or 3rd payment was preauthorized, but nothing came from my bank account. I'm not sure of the total value of these payments but my closest guess is $10 000. Thinking back, I'd sometimes noticed payments I didn't make, but I assumed my wife had paid the bill.

I spent hours on the phone with the bank, but got nowhere. They insisted that I had set up preauthorized payments from my bank account, but could not tell me what account or show me the form they claimed I had sent. They insisted that the money was mine and had come from my account, but I knew it wasn't mine and did not want to let it go.

I mentioned it to my father, and he told me that he'd opened up the same type of credit card about 3 years ago, and had set up preauthorized payments. We looked back through his account and saw that money was actually being taken from his bank account and used to pay off my credit card! It would happen only on the months where I waited too long to pay the bill myself. He never noticed because his accountant would pay his credit card bill, not knowing it was supposed to be preauthorized.

I realized what had happened but it still took hours on the phone explaining and cajoling to finally get the bank to retrieve the authorization form and take a good look at it. They confirmed that they had made a mistake, and incorrectly taken money from my father's bank account to pay my credit card bill. We have the same address and initials, so I am guessing they just mixed things up when processing his form. But it definitely told them to apply the payment to my father's credit card, not mine.

A customer service rep called me to apologize, and offered me $150 in points as compensation. I don't think this is a fair offer - this has wasted a huge amount of my time, and now I presumably owe $10 000 to my father, money that I could eventually get but do not have on hand. My father has been deprived of $10 000 that he now needs to wait for me to give him.

I am thinking that both my father and I should each be compensated for their error, but I don't know what a fair amount would be. Can anyone offer an opinion?

Are there any regulations that would govern what happens in a case like this? Does it make sense to seek legal advice?

Any other ideas on how I should proceed?

Thanks!
 

jsn55

Verified Member
Dec 26, 2014
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#2
Oh my goodness, this is an amazing story, pancakes. If you both have the same name and the same address ... the mind boggles at how the bank was supposed to take care of the pre-authorization. Social security number I guess. It seems bizarre that you didn't notice that something was going on with your credit card. I'm surely not excusing the bank, but they definitely have some responsibility here and so do you.

I scrutinize each and every credit card statement that I receive, and so should everyone who uses CCs regularly. I would ask your father's accountant to do an audit of this whole mess for you both. Then you can make up a payment plan to reimburse your dad.

Personally, I'd cancel the card immediately and open an account at a different bank.
 

Neil Maley

Moderator
Staff Member
Advocate
Dec 27, 2014
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www.promalvacations.com
#3
We don’t know what Canadian banking regulations are but why would you want anything other then having this corrected? It sounds like you spent money that wasn’t yours.

Why would you use money that you knew you never deposited and just left the credit balance on the card until you found out what was happening?

Didn’t your Dad ever notice his account wasn’t credited? This is actually an issue on both of you- he never checked his statements and you didn’t leave that money on your card.

Why can’t the bank charge the payments made in error back to your card so you can pay it off?

Here in the states if money is improperly credited to someone’s account- they owe the money back to the bank.

I would suggest that you contact whatever banking authorities you might have in Canada and see if you can rectify this.

We are in the US and know nothing about regulations in Canada.

You might want to contact an attorney.
 

Barry Graham

Administrator
Staff Member
Director
Jan 7, 2015
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#4
It sounds like an odd mistake. On the other hand, had it not happened, wouldn't you have been late on payments and paid interest and late fees? It's admirable that you were so honest and persistent about money that wasn't yours being used to pay your bills.
 
Aug 5, 2018
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#5
We don’t know what Canadian banking regulations are but why would you want anything other then having this corrected?

Not every mistake equals compensation and what kind of compensation should a bank give anyway?

Your Dad is the one who should be complaining, he had the issue. If Canada has a banking authority, that’s who you should file a complaint with but honestly- I am baffled by you even loom g for anything.
Yes, my father has been deprived of a substantial amount of money for a substantial period of time. Don't you think he is entitled to be compensated for that? If he had put that money in the market over that period he might have earned several thousand dollars.
 
Aug 5, 2018
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#6
It sounds like an odd mistake. On the other hand, had it not happened, wouldn't you have been late on payments and paid interest and late fees? It's admirable that you were so honest and persistent about money that wasn't yours being used to pay your bills.
The automatic payment kicks in about 5 days before the due date. I would probably not have been late, I just would have paid less than 5 days before the due date.
 

Neil Maley

Moderator
Staff Member
Advocate
Dec 27, 2014
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www.promalvacations.com
#7
Yes, my father has been deprived of a substantial amount of money for a substantial period of time. Don't you think he is entitled to be compensated for that? If he had put that money in the market over that period he might have earned several thousand dollars.
He is entitled to be made whole and any interest charges he was made to pay should be refunded. But didn’t he ever check his statements either?
 

Barry Graham

Administrator
Staff Member
Director
Jan 7, 2015
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#8
The automatic payment kicks in about 5 days before the due date. I would probably not have been late, I just would have paid less than 5 days before the due date.
I think you are right to be cross with the bank. Did the accountant have access to the bank statements? I'm just wondering if he could have noticed that incorrect withdrawals were being made.
 
Likes: jsn55
Mar 14, 2018
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#9
He is entitled to be made whole and any interest charges he was made to pay should be refunded. But didn’t he ever check his statements either?
My first instinct would be to let this one go. The bank should definitely refund you father's money, probably with interest. The flip side is that you owe the bank the same amount of money, and probably with interest at credit card rates.

It seems like your father's potential upside is a couple hundred dollars (1% interest on $10K over 3 years), while your potential downside is thousands of dollars (18% interest on $10K over 3 years).

You're playing poker with a losing hand. You can bluff and try to win a bit more, but be prepared to get called.
 
Sep 19, 2015
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#10
Boy oh boy, what a mess. The recipient of a bank error is not allowed to keep it -- there are various laws (unjust enrichment) and all that, combined with bank regulations, this is a tough one.

Honestly I am very concerned that no one ever reconciled their bank account, especially the accountant handling the father's bill. Check fraud (called washing, erasing the ink and changing the recipient and amount), unauthorized transfers and withdrawals. all these things are a crimes that are occurring.

The problem is that the father is entitled to the money back from the bank and the bank is entitled to the money back from the son.
 

Neil Maley

Moderator
Staff Member
Advocate
Dec 27, 2014
12,789
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New York
www.promalvacations.com
#11
I think you are right to be cross with the bank. Did the accountant have access to the bank statements? I'm just wondering if he could have noticed that incorrect withdrawals were being made.
I think he should be upset with his accountant as well. Besides not knowing that there were automatic payments- didn’t he question there were auto debuts and where they were going?

Our writer admits that this only happened when he was late with his payments.
 
Mar 17, 2015
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#12
The bank does not owe your father the money plus interest, you do. You were the one unjustly enriched. Most people would notice if all the sudden large payments were made on their credit card. My sister and I both had Bank of America accounts and this happened once, with a much smaller amount of money. Both the s us went to the bank to sort it out (we also have the same first and last initial),but we noticed it immediately as we both reconcile our bank accounts each month.
If the bank had been put in a better position, i.e. carrying a credit on a charge account, then I may think the bank would owe interest on that amount, but from what you described, the bank was not in a better position, you were.
 
Sep 19, 2015
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#13
while the bank made a big mistake, the account owner has the responsibility to review the statement.

A lot of the problems could have been avoided by reviewing the bank statements which is a normal and prudent activity.

Yes, my father has been deprived of a substantial amount of money for a substantial period of time. Don't you think he is entitled to be compensated for that? If he had put that money in the market over that period he might have earned several thousand dollars.
Or he could have lost the money completely in a bad investment.

A person has a shared responsibility with the bank to review the statements and reconcile the account. I am absolutely perplexed as why the accountant did not do this it is basic bookkeeping.

There were many opportunities to minimize the loss by reviewing the statements and there was no effort to do that.
 
Sep 19, 2015
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#14
As an aside, I got a statement (not bank or financial industry) from a professional service that had a surprise credit of several thousand dollars. Put it aside forgot about it as I left the country. 30 days later another statement. Picked up the phone and called them. It was a mistake in my favor. It was corrected. I can understand putting something aside for a month or so. But eventually, even if quarterly one should review, especially with the prevalence of fraud.
 
Jul 27, 2016
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#15
Yes, my father has been deprived of a substantial amount of money for a substantial period of time. Don't you think he is entitled to be compensated for that? If he had put that money in the market over that period he might have earned several thousand dollars.
True, but, on a net basis, you're the one who (unintentionally) deprived him of that money.