What happens if I transfer money to the wrong bank account?

Long gone are the days when you had to repay money with cash or by whipping out your cheque book, because the invention and uptake of online bank accounts has made everything from transferring money to friends and family to paying rent and bills a breeze.

Despite the ease and convenience online banking provides there is one snag - it does make transferring money to the wrong account a lot easier. So what happens if you do make a mistake and send off your hard-earned funds to the wrong account?

How to stop it happening in the first place

According to an ASIC (Australian Securities and Investments Commission) study in 2015, 83% of mistaken transactions took place because people incorrectly entered the account details of the person they were transferring funds to.

So it may seem like common sense, but every time you go to transfer money to a new recipient in your phone or on your bank's website, make sure you double check that both the BSB and Account Number are correct.

What about the Account Name you ask? That’s just used for recording purposes, so it’s really important to make sure you get the first two bits of information spot on.

The steps to take if you do make a mistake  

So, the worst has happened and you’ve mixed up your friends BSB or Account Number while trying to send them money for dinner the other night. Aside from assuring them that you will pay up, what should you do next?

Contact your bank! Do this as soon as possible, as the faster you get in contact the more likely it is that you’ll get your money back. The rest depends on how long it’s been since the transfer took place:

Scenario One - It’s been less than 10 business days

According to the Financial Ombudsman you’re in luck - if you make a claim within the first ten business days of the transfer going out your money will be returned to you in full.

Scenario Two - It’s been between 10 business days and 7 months

If you’ve left it more than 10 business days, or just didn’t notice your mistake in that period, then things get a little bit more difficult. According to the Ombudsman, the recipient's bank is obliged to put a freeze on the disputed money and notify the recipient that they have up to 10 business days in which to prove they are actually entitled to the funds. If they can’t offer proof that the money is rightfully be theirs then the funds will be returned to you.

Scenario Three - It’s been over 7 months

This is where it gets really tricky. According to the Ombudsman and ASIC’s ePayments Code (which these types of transactions are governed by) after seven months the recipient of your funds is not actually obliged to return them to you, unless they agree to do so. So basically your funds are completely in their hands.

What about transfer mistakes involving BPAY?

Plenty of Aussies use BPAY as an easy way to pay their rent or energy bills, so is there any difference between making a mistake using BPAY as opposed to making one with your regular bank account? Unfortunately there is.

While the vast majority of Australian banking providers (117 in total) are subscribers to the ePayments Code, payments made with BPAY are not covered under the code. However, the Financial Ombudsman suggests that if you do make a mistake while using BPAY and end up transferring money to the wrong recipient you should still get in contact with your bank or credit union.  

What if my bank or provider isn’t assisting me?

If you’ve made an erroneous transfer and your bank or credit union isn't providing you with adequate assistance to resolve the problem, you’ll be able to lodge a dispute with the financial ombudsman.

What if I receive money in my account which isn’t mine?

Bear in mind that while a sudden windfall in your bank account may seem like a real stroke of luck, that money isn’t actually yours and you’ll have to pay it back. So get in contact with bank or provider and tell them what’s happened, and certainly make sure you resist the temptation to spend it!

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