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Can you keep money accidentally paid into your bank account?

We all dream of receiving an unexpected windfall, but what are your rights if you receive an accidental payment into your bank account?

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In a nutshell, no. Legally, if a sum of money is accidentally paid into your bank or savings account and you know it doesn't belong to you, then you must pay it back.

Why you cannot keep it

Keeping any money wrongly credited to your account could lead to you being charged with retaining wrongful credit' under the Theft Act 1968.

You could be guilty of an offence if a wrongful credit is made to your account and:

  • You know the credit has been made incorrectly

  • You don't take steps to cancel the credit

What not to do

No matter how tempting it is, don't immediately go out and spend the money.

You will be liable to pay it back, even once the funds are gone, if:

  • A bank or individual accidentally paying money into your account

  • You are overpaid by your employer

What should you do?

If you do receive an unexpected payment into your bank account, 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.

Think about how you would feel if the roles were reversed and it was your money sitting in someone else's account.

Case study

A woman from Blackburn was sentenced to 10 months in prison after she went on a spending spree, after receiving £135,000 in error from Abbey bank.

Windfall winners

There have been some exceptional cases where individuals have been allowed to keep money accidentally paid to them. This can happen in two ways:

  • 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 a year for three years won a court case to keep her windfall. A tribunal ruled in her favour after she successfully argued she had assumed the increase was a pay rise that she had been promised by her employers.

  • If you did not realise you were given money in error: This argument was used successfully 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, argued that she spent the money believing that it belonged to her. This sort of case is the exception not the rule, and pleading ignorance is unlikely to work in your favour.

Can you earn interest on payments made in error?

You may be able to put the windfall into a separate savings account and earn interest, until you have rectified the error with the bank or the rightful owner.

This strategy was successfully adopted by a postal worker in the US who received a pay rise 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 he was overpaid, his financial savvy meant he ended keeping nearly £500 in interest earned.

Honesty is the best policy

Do not be tempted to spend your windfall, even if nobody contacts you immediately. Banks regularly carry out audits which means they will always catch up with you.

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.

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