Are You Allowed to Use Money that is Mistakenly Deposited into Your Bank Account?

You are not entitled to spend money that you do not deposit into your account and would be wise not to do so

Are You Allowed to Use Money that is Mistakenly Deposited into Your Bank Account?
Image: Pixabay
August 22, 2018

Have you ever noticed that your bank account somehow had 'extra' money in it even though you knew for a fact it wasn't yours? No. We haven't, either. Many of us dream about this type of scenario, but don't really run into it.

If this has happened to you, you're not alone. Even in this day and age, it happens more often than you would think! It only takes a second for a bank teller to key the wrong digit when entering an account number during a deposit transaction. Likewise, it only takes a second for a teller to make the same mistake when withdrawing money! And let's face it. Most of us don't double check the account numbers on our receipts after we complete a transaction.

What Do You Do if you unexpectedly find extra money in your account?

If you find yourself with an unexpected financial windfall in the form of a deposit you didn't make, you may be wondering if you are entitled to keep the money. This is the time when all of your friends suddenly become armchair lawyers, giving you all sorts of differing advice. But, unfortunately, the money isn't yours unless you made the deposit or if someone made the deposit on your behalf.

The only time you can keep money that is deposited into your account is when the deposit was intended to be made into your account. So, if the deposit was a mistake, you can't keep the money. It's as simple as that.

what happens if you use the money that wasn't yours?

A simple search of the web can deflate your bubble really fast if you find yourself with unexpected money. Cases abound of people who have received erroneous deposits and then spent some, most or all the money and found themselves facing criminal charges. People did various things with the money, from moving it to other accounts to gain interest, investing it, buying cars, helping relatives with bills, or giving to charity. Criminal charges varied by state, but basically amounted to theft of property lost by mistake and receiving stolen property, even in cases where the money went for good or noble causes. In some cases charges were dropped with orders to repay and in others the courts had no mercy, sentencing the offenders to probation and/or prison time. But it all depended upon the judge, the attorneys and the circumstances.

In any case, you should expect that criminal charges are very likely to be leveled against you in order to get court orders for you to repay the money and to serve as a deterrent for others who find themselves in the same situation.

Who Is Responsible for replacing the money that was deposited in the wrong account?

The financial institution is ultimately responsible for replacing money that was deposited into the wrong account. So if you deposit $10,000 and your teller puts it in the wrong account, your financial institution will credit your account when either you notify someone of the mistake or it is discovered during an audit. If the money was already spent before this time, you'll still be credited and the person who spent the money will at the very least be responsible for paying it back to the financial institution.

Won't the mistaken deposit Slide Under the Radar?

While it may be tempting to run off if the bank makes an error in your favor, rest assured that the error will be discovered. Financial institutions are meticulous in their records and their auditing process, so you'll be found out sooner or later. Many erroneous transactions are discovered very quickly, but some may not be discovered until years later. Think about it. If you make a deposit and it doesn't show up in your account, you'll notify your financial institution, which will then do some digging to find out where the money went. Once the error is discovered, the transaction will be reversed, even if it sends someone's account into the red.

Let Your Financial Institution Know

If you ever run into a situation where you notice an unexpected deposit, you should leave it alone and notify your financial institution as soon as possible. It's possible that the erroneous deposit is already on someone's radar and in the process of being reversed, but not always. Would you want someone to do the right thing if your money is mistakenly deposited into someone's account?

Don't automatically tell the representative that the money isn't yours, especially if other people sometimes make deposits for you e.g. parents. You don't want to give up unexpected money if in fact it turns out to legitimately be yours. Just let the representative know that you don't know where the deposit came from and you'd like it investigated. You never know! The financial institution might allow you to keep the money if it investigates and can't trace it back to a mistake. In any case, you should check with anyone who has made deposits for you in the past before calling to make sure a deposit wasn't made for you.

Moving The Money into another account is not a good idea

Even if you notify (or plan to notify) your financial institution about an erroneous deposit, you may be tempted to move the money to another account, such as a brokerage account, stock account or money market account, in order to generate handsome interest. Doing so may still be construed as theft and you don't want to be in the red if the bank suddenly discovers the error and reverses the transaction.

While It's Common, It's Not Ordinary

It is worth noting that billions of successful and proper transactions are made each and every day. So while it is a common occurrence for a mistake to be made due to carelessness, it's definitely the exception and not the rule.

What Can you do to protect your money from being deposited into the wrong account?

If you are making a deposit in person, ensure that the account number you write on your deposit slip is correct and legible. It only takes a second for the teller to think that your 3 is an 8. Tellers are supposed to verify the name on the account before proceeding with the transaction, but might skip this step. So make sure before walking away to verify that the account number on your receipt if your account number.

It can be safer to make a deposit via the ATM or via mobile deposit. When you insert your card into the machine or you log in to your mobile account, your account number is pulled up automatically. This prevents account numbers from being entered incorrectly. Just make sure that you select the right account when making your deposit! You don't want to put it into savings account if you need it in your checking account.