Most of us have found ourselves in a sticky situation where we’ve spotted an unauthorised or mistaken transaction on our bank account or credit card statement. Here’s how to avoid footing the bill.
The average Australian makes about 480 electronic transactions each year - and that number is rising quickly.
Amongst these daily transactions, both mistakes and unauthorised transactions occur.
It’s therefore important that you spend a bit of time each week or month quickly reviewing your transactions for discrepancies.
Because as we’ll explore below, the sooner you inform your bank, the better your chances of getting a refund.
How mistaken and unauthorised transactions occur
Everyone is guilty of making the occasional typo.
The thing is, though, that if you slip up when typing in a BSB or account number, you can end up paying the wrong person or company.
Sometimes it might not even be your fault. The person you’re paying might have accidentally supplied you with the wrong number.
An ASIC report shows that 83% of mistaken transactions are due to somebody typing in the wrong number, while the other 17% are due to people selecting the wrong payee.
Meanwhile, unauthorised transactions occur when funds are transferred from your account without your knowledge or consent, by someone who has access to your account.
The ePayments Code
Ok, so you’ve found an anomaly in your bank or credit card transactions? Here’s the good news.
Users of electronic payment facilities in Australia are protected by the ePayments Code, which covers electronic payments including ATM, EFTPOS and credit card transactions, online payments, internet and mobile banking.
Most banks, credit unions and building societies in Australia – as well as consumer electronic payment facilities, such as PayPal – subscribe to the code.
How does the code protect you against transaction errors?
The sooner you report a transaction error, the better.
If you report the error within 10 business days the Financial Ombudsman says the funds will be returned to you - so long as your account institution believes the mistake is genuine.
If you report the problem between 10 business days and seven months, you should still get your money back if the funds are still in the recipient's account.
The recipient will have 10 business days to show they are entitled to the funds. But if they can’t, the funds get returned to you.
If it has been longer than seven months then things start to get a little messy.
Basically, if the money is still in the recipient's account, you’ll only get the money back if the recipient agrees.
It’s important to note that BPAY payments are not covered by the ePayments Code, as BPAY uses a different process to resolve mistaken payments.
You should still contact your financial institution though, as they may be able to advise you of steps you can take to recover the funds.
Getting your money back after an unauthorised transaction
While the process for resolving an unauthorised transaction is different, once again speed is key. So report it to your bank immediately. After all, you also want to prevent any more unauthorised transactions.
According to ASIC, you are likely to get your money back if:
- a forged, expired, faulty or cancelled PIN or card was used
- the transaction was fraudulently made by an employee of your financial institution
- the transaction took place before you received your card, PIN or password
- a merchant incorrectly debited your account more than once
- the transaction occurred after you told your financial institution that your card was lost or stolen, or that someone else may know your PIN or password
- it's clear you haven't contributed to the loss.
Meanwhile, you’re less likely to get your money back from an unauthorised transaction if you acted fraudulently, accidentally left your card in an ATM, didn't keep your PIN or password secret, or unreasonably delayed telling your financial institution that your card was lost or stolen.
Reporting the issue
Before you report a mistaken or unauthorised transaction, check to see if your bank or payment service provider has subscribed to the ePayments Code by looking here.
If they have, get in touch with them straight away. And don’t forget to request a reference number so that you can verify that you made the report if required at a later date.
If they are not a subscriber, feel free to still raise your concerns with them. They may have an internal policy in place.
Final word
Mistakes happen. To err is human. People make tipos all the time.
The two most important things you can do to protect yourself are to regularly review your accounts, and instantly inform your financial institution of any account anomalies you spot.
Oh, and if you happen to be on the receiving end and find unexpected funds in your account, resist the temptation to spend it as there’s a good chance you’ll have to pay it back.
Instead, get in touch with your bank or financial institution and let them know what’s occurred.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
