We all dream of receiving an unexpected windfall, but if you did receive an erroneous payment into your bank account - would you ever be able to keep it?
In a nutshell: ‘No’. From a legal viewpoint, if a sum of money is accidentally paid into your bank or savings account and you know that it doesn’t belong to you, then you must pay it back.
Why you can't keep it?
Unfortunately, life is not like Monopoly and, if you received a bank error in your favour and spend it, you are far more likely to go directly to jail than collect £200.
Keeping any money wrongly credited to your account, could lead to you being charged with ‘Retaining wrongful credit’. The 1968 Theft act defines this as: "A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it".
It goes on to say that: "A person is guilty of an offence if:
- (a) a wrongful credit has been made to an account kept by him or in respect of which he has any right or interest;
- (b) he knows or believes that the credit is wrongful; and (c) he dishonestly fails to take such steps as are reasonable in the circumstances to secure that the credit is cancelled."
What not to do
There appear to be two kinds of the classic ‘money received in error’ story: either a bank or individual accidentally paying money into your account or being overpaid by your employer. No matter how tempting it is, do not immediately go out and spend your windfall like a lottery winner.
Try to learn from the fate of a woman from Blackburn who, upon receiving £135,000 in error from the Abbey bank, went on a spending spree and ended up being sentenced to 10 months in prison. Or the New Zealand couple who fled the country with $6 million after wrongly being given a NZ $10 million overdraft and are now the subject of an international manhunt.
What should you do?
If you do receive an unexpected windfall then you should always inform your bank immediately. Waiting for the bank to notice their mistake could take weeks and during that time the temptation to spend will be harder to resist.
Even though it may be extremely tempting to hang on to it, try to think of it from the point of view of the person whose money it actually is. It might belong to someone who needs it desperately, like a pensioner needing the money to pay for their heating bill. Have a think about how you would feel if the roles were reversed and it was your money sitting in someone else’s account.
Windfall winners
There have been some exceptional cases where individuals have been allowed to keep money accidently paid to them. These tend to fall into one of two categories:
- If you have a credible argument as to why you should keep it. For example, a part-time bank worker who was overpaid £7,500 per year for three years has recently won a court case to keep her windfall. A tribunal ruled in her favour after she successfully argued that she had assumed the increase was the pay rise that she had been promised by her employers.
- If you did not realise that you were given it in error. This argument was first used successfully back in 1950 in a case between Lloyds Bank and Cecily Kate Brooks. Ms Brooks, expecting a similar payment to the amount wrongly credited to her account, argued that she had genuinely spent the money while believing it belonged to her. Generally, this kind of case tends to be the exception rather than the rule and pleading ignorance is likely to fall upon deaf ears unless the amount involved is tiny.
Another approach where people have benefitted from their windfall, is to put it in a separate savings account and earn interest until the error is rectified by the bank or the rightful owner has been tracked down. This strategy was successfully adopted by a postal worker in the US who received a pay rise that he knew he wasn’t entitled to and immediately informed his supervisors of their error.
While he waited for the situation to be resolved, he banked his pay rise in a separate savings account to accrue interest. It was three years before his employers corrected their mistake and despite having to pay back all the money that he was overpaid, his financial savvy meant that he ended keeping nearly £500 in interest earned.
Honesty is the best policy
Don’t be tempted to spend your windfall even if no-one contacts you immediately. Banks regularly carry out audits which means that ‘the man’ will always catch up with you sooner rather than later.
Honesty is always the best policy and, by informing your bank or employer promptly, you could even find yourself on the receiving end of a reward.
