When online banking goes wrong

Nov 19, 2010   //   by sam   //   Banking and Savings Accounts, Technology  //  Comments Off on When online banking goes wrong

The Red Mist DescendsOnline banking is now used by millions of us to transfer money between savings accounts, ISAs or to friends and relatives.

Most banks now operate using the faster payments system enabling money to be sent instantly by the click of a mouse.

This means the money credits the beneficiary’s account instantly and is available to withdraw soon afterwards.

But for this process to complete as planned you must have first ensured that all of the details were entered correctly.

A listener of the BBC Radio 4 Money Box programme, who banks with Halifax, spoke of how he set up a payment to his wife’s savings account. Although the account name and sort code were correct he made a slight mistake when entering the account number, with one incorrect digit.

However, the number he entered was in fact a valid account number for someone else’s account, so the £1500 was sent to that bank account.

He said: “The bank seemed to think that I’d double clicked on a “3” so that the last three numbers were 496, but because I’d clicked on the 3, the 394 came up, I didn’t pick up on it, and it went through someone else’s account.”

It was not until a few weeks later upon checking his wife’s account that the mistake was noticed.

The unknown recipient withdrew the money within 24 hours of the accidental transfer.

According to the listener, Halifax said it had sent a letter to the customer on his behalf asking for the money to be returned, but it is powerless to do anything else.

A spokesperson from the Information Commissioner’s office said that Halifax us under no circumstances to reveal the name of the customer.

However, it added that if the person that withdrew the cash did so knowing that it did not belong to them then this is seen as a crime, which means the police could get involved and obtain the details.

Most people are unaware that when making a cash transfer, most UK banks do not check customers account number against the name provided to make sure they match.

Sandra Quinn, of the UK Payments Administration said: “The way all payments are allocated these days is by the sort code and account number, so your six digit sort code and your eight digit account number.

“Because systems are automated and they’re transmitting more than 10million payments a day in some cases, the only real way that payments can be allocated to accounts is by those digits rather than by the name.”

In a statement Halifax said:

“We understand the frustration that the customer is experiencing.

“We are taking all reasonable steps to recover these funds on the customers behalf, and will keep him updated in relation to this matter.”

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