Mistaken wire transfer/payment error

Joseph Watson3 said:So, what you're saying is that pocketing money that landed in an account by mistake doesn't matter—and the court wouldn't have a single issue with how it was acquired? If the sheriff foreclosed on his house, or if his neighbor’s car somehow ended up in his driveway and he just decided to keep it, would that be irrelevant too?

You’re still stuck on this idea of "someone else's money." You need to realize that isn't the point here; the law handles those specifics. For instance, if I have $0.67 in my account, and a friend has a legitimate claim against me for $1.00, AT&T can certainly seize those $1.00 through a garnishment. According to your logic, that would somehow be "unjustified acquisition." How is AT&T supposed to know I owe a friend $1.00? We are talking about debt collection; money is simply a matter of liquidity and only matters regarding the timing of payments or seizures. If I recall correctly, we already agreed that both Company X and the bailiff hold valid claims against certain forum members, so I don't see what you're trying to prove... I know you previously convinced yourself that Qwerty and I were saying things we never actually said, so I'm not sure where the issue lies now...😕

Arthur Mendoza5 said:Obviously, the company can't just write this off because we're talking about a payroll disbursement, and you can't dodge the taxes, withholdings, or social security contributions on that.
The only real way out is for the employer to just pay the difference—the part our guy doesn't actually have in his account because it got hit by a garnishment—directly in cash to the employee who was supposed to receive the full amount. That way, the worker isn't shortchanged and stays out of trouble, and the company doesn't have to chase our forum buddy, who isn't even at fault here, even though he technically owes the money.
That's the only move left—just sit down and make a deal, because I'm pretty sure there isn't a specific Law that dictates how to handle a mess this weird.

It can't be classified as salary since the user doesn't have an employment contract or any formal relationship with the company. They could declare it as a personal loan or a receivable from an individual. It would be much better for them to structure it as a debt recovery rather than income; if it's income, all those taxes kick in, whereas a loan only requires them to account for the minimum interest required by law. An accountant handles interest on a loan to an individual just like any other private loan. If the user denies the debt exists, they'll be stuck recording it based on a court order... though I'm not entirely sure how that works. 🤷
If a court eventually rules that there was no legal basis for the transfer—perhaps citing gross negligence or the intentional misuse of funds—then Company X might finally be able to write it off as a business expense.

Thomas Ortiz3 said:You’re still stuck on this idea of "someone else's money." You need to realize that isn't the point here; the law handles those specifics. For instance, if I have $0.67 in my account, and a friend has a legitimate claim against me for $1.00, AT&T can certainly seize those $1.00 through a garnishment. According to your logic, that would somehow be "unjustified acquisition." How is AT&T supposed to know I owe a friend $1.00? We are talking about debt collection; money is simply a matter of liquidity and only matters regarding the timing of payments or seizures. If I recall correctly, we already agreed that both Company X and the bailiff hold valid claims against certain forum members, so I don't see what you're trying to prove... I know you previously convinced yourself that Qwerty and I were saying things we never actually said, so I'm not sure where the issue lies now...😕

They can't. It's just like buying a stolen car—you might not know it's hot, but that doesn't stop you from getting in trouble.

Besides, I wasn't trying to lecture anyone on what's strictly legal; I was talking about what's actually fair here. If we're playing by the book, he has every right to keep the cash and just wait for a lawsuit—which, let's be honest, isn't happening over such a tiny amount of money.

Thomas Ortiz3 said:There was no criminal act here—unlike stealing a car, where no subsequent action makes stolen goods legal—nor do I see any misdemeanor being committed, so the car analogy doesn't hold water. It's clear that from the user's perspective, things just got messy; it wasn't his fault, but if I understand correctly, he wouldn't be facing these complications if the funds hadn't been available in the first place. The costs of this mess, like interest and such, should fall on whoever caused the complication, which in this case is "Company A."
The key is for him to establish communication with "Company A," or rather, the Bank acting as the intermediary.
Company A would likely be helped by acknowledging the debt, as it would save them from having to deal with taxes and contributions...

And honestly, he’s going to have to pay the money back and work out a plan, even if there's zero chance a bailiff is actually going to claw that cash back. I mean, what can they even do? If they had anything of his to seize, they would've already taken it via garnishment. For things like interest or whatever else, they'd likely have to take him to court, and by the time that's sorted, I highly doubt anyone's pulling small change out of a bailiff's pocket...
For me, it's just about looking at the logic of the situation. 🙂
The car thing is an analogy because a car is a physical object, whereas money is digital. If you view the transaction as moving a physical item, you could argue the money was always Company A's property held by the forum user before it was sent to the collector—meaning it still belongs to the company and needs to be returned. Or, you could argue the money belongs to the forum user and he doesn't owe the company a dime. Just because the transfer wasn't "criminal" doesn't mean it isn't legally problematic. If you look at money as a physical asset (like actual dollar bills in your hand), the math is pretty simple: the guy never actually owned the assets; he was just holding onto them. In that scenario, the collector took property that belonged to the company, which brings us to that rule: "When a portion of one person's property passes to another without a valid legal basis, it's a problem."

Joseph Watson3 said:They can't. It's just like buying a stolen car—you might not know it's hot, but that doesn't stop you from getting in trouble.

Besides, I wasn't trying to lecture anyone on what's strictly legal; I was talking about what's actually fair here. If we're playing by the book, he has every right to keep the cash and just wait for a lawsuit—which, let's be honest, isn't happening over such a tiny amount of money.

The car analogy again. If I buy a stolen vehicle, legally speaking, I haven't actually bought anything because the sales contract is void. I've simply been in possession of stolen property—which is a crime if there was intent, though one can dodge the penalty if they were unaware...

Money isn't comparable to a car. If AT&T executes a garnishment based on a court order, that isn't "unjust enrichment"—please re-read that article carefully. Possession of stolen goods and unjust enrichment are entirely different legal concepts under completely different statutes. Let's stop conflating them...

Besides, I wasn't arguing what the law dictates, but rather what would be fair in this situation. If we are strictly discussing legal rights, he has an absolute right to withhold the money and wait for a lawsuit, which likely won't ever materialize over such a small amount.

Law and justice—what "should be fair"—are often confused. There is no justice here, only the question of compromise. None of the parties involved acted with malice, yet everyone ends up dealing with the fallout... time, money, stress. This isn't even necessarily gross negligence; it's just one of those things that happens to anyone...

In my first post, I mentioned the scenario where someone spends the money without realizing it wasn't theirs. Legal precedent in Germany suggests that in such cases, one might not be required to pay it back. While Germany isn't America, this isn't about "spending money," it's about a garnishment. Theoretically, a judge here could rule that the funds can be kept if they determine the company wasn't responsible for any increase in the debt. Generally, the legal system tries to align itself with justice whenever realistically possible...

Thomas Ortiz3 said:The car analogy again. If I buy a stolen vehicle, legally speaking, I haven't actually bought anything because the sales contract is void. I've simply been in possession of stolen property—which is a crime if there was intent, though one can dodge the penalty if they were unaware...

Money isn't comparable to a car. If AT&T executes a garnishment based on a court order, that isn't "unjust enrichment"—please re-read that article carefully. Possession of stolen goods and unjust enrichment are entirely different legal concepts under completely different statutes. Let's stop conflating them...

Besides, I wasn't arguing what the law dictates, but rather what would be fair in this situation. If we are strictly discussing legal rights, he has an absolute right to withhold the money and wait for a lawsuit, which likely won't ever materialize over such a small amount.

Law and justice—what "should be fair"—are often confused. There is no justice here, only the question of compromise. None of the parties involved acted with malice, yet everyone ends up dealing with the fallout... time, money, stress. This isn't even necessarily gross negligence; it's just one of those things that happens to anyone...

In my first post, I mentioned the scenario where someone spends the money without realizing it wasn't theirs. Legal precedent in Germany suggests that in such cases, one might not be required to pay it back. While Germany isn't America, this isn't about "spending money," it's about a garnishment. Theoretically, a judge here could rule that the funds can be kept if they determine the company wasn't responsible for any increase in the debt. Generally, the legal system tries to align itself with justice whenever realistically possible...

Am I following this correctly? So, if Person A accidentally transfers funds to Person B's account in Germany, Person A might just have to eat the loss—meaning they wouldn't have any legal right to claim it back?

quieteagle16 Asks:
Let's be realistic, they'll have to pay it back and figure out a plan for when the liquidator makes it impossible to recover any funds...

I fail to see any legal grounds that would compel an executor to return those funds. The seizure was carried out strictly according to the law, and no regulations were violated during the process. I am writing this in good faith, mind you—foreclosures aren't exactly my area of expertise...

A car is a better analogy because it’s a tangible asset, unlike money which is just digital noise...

Stealing a car is a felony, possessing stolen property is a felony, and selling a stolen vehicle is a felony. In these cases, the burden falls on the owner to prove they didn't know the car was hot...
In this instance, there isn't even a crime or a misdemeanor to speak of. It’s nothing more than simple negligence on the part of someone else entirely—not even the collector... just some third party with no direct connection to them at all...

An executor seized control of the company, and this is what applies: when a portion of one person's assets transfers to another without any legal basis...

The money sitting in a user's account isn't some asset owned by the company. It doesn't even function in a way that would allow for such a claim... which is why you see liabilities that can end up being a hundred times larger than the actual cash on hand...

It seems we’re seeing another instance of selective quoting regarding the law. You missed the specific section I’ve bolded below, which fundamentally alters the entire nature of the foreclosure...

Unjust enrichment without cause. Under Section 1111, if any portion of one person's assets transfers to another without being backed by a valid legal transaction... It comes down to the ruling of a court, or perhaps some other competent authority or legal mandate...The taxpayer is obligated to return it; otherwise, they must compensate for the value of the benefit received...

An attachment can't exactly be considered an acquisition without legal basis if it was carried out under an IRS warrant...

Lawrence Cruz said:Am I following this correctly? So, if Person A accidentally transfers funds to Person B's account in Germany, Person A might just have to eat the loss—meaning they wouldn't have any legal right to claim it back?

I actually read a German court ruling on this once, and it stuck with me because of how it played out. The crux of the matter was that the recipient genuinely didn't know the funds weren't theirs. It went something like this: a person was expecting a payment from someone else, checked their balance at an ATM, saw the funds had arrived, and assumed it was the expected transfer. In reality, it was just a botched transaction. The individual started spending the money, thinking it was rightfully theirs, while the actual expected payment never materialized. Since they truly believed the money belonged to them, the judge ruled they had no obligation to investigate the source of the funds. Had the judge ordered the money returned, it would have unfairly punished someone who did nothing wrong and had no ill intent. Because the person wasn't responsible for the error, the court decided the claim should be dropped...
In my view, that’s the only somewhat fair way to handle such a situation. If the person had known they were spending money that wasn't theirs, the story would be entirely different—just as it would be if the mistaken transfer hadn't been spent yet...

It seems this has become established legal precedent, though proving a lack of intent or genuine ignorance is where things likely get complicated...

Thomas Ortiz3 said:It can't be classified as salary since the user doesn't have an employment contract or any formal relationship with the company. They could declare it as a personal loan or a receivable from an individual. It would be much better for them to structure it as a debt recovery rather than income; if it's income, all those taxes kick in, whereas a loan only requires them to account for the minimum interest required by law. An accountant handles interest on a loan to an individual just like any other private loan. If the user denies the debt exists, they'll be stuck recording it based on a court order... though I'm not entirely sure how that works. 🤷
If a court eventually rules that there was no legal basis for the transfer—perhaps citing gross negligence or the intentional misuse of funds—then Company X might finally be able to write it off as a business expense.

If I'm following this correctly, the company was trying to pay its employee via the IRS, so from the business's perspective, it's a formal liability that triggers all those taxes and withholdings.
I honestly think it would be a hell of a lot simpler for everyone involved if they just handed the difference to the employee in cash—since the forum guy can't pull it from his account anyway—and then worked out a side deal with the forum guy himself.
The main point is that the forum guy has zero official connection to that company.

When claims can't be collected, or when they end up tied up in legal battles, they just get moved over to the "Doubtful and Disputed Receivables" account.

Thomas Ortiz3 said:I actually read a German court ruling on this once, and it stuck with me because of how it played out. The crux of the matter was that the recipient genuinely didn't know the funds weren't theirs. It went something like this: a person was expecting a payment from someone else, checked their balance at an ATM, saw the funds had arrived, and assumed it was the expected transfer. In reality, it was just a botched transaction. The individual started spending the money, thinking it was rightfully theirs, while the actual expected payment never materialized. Since they truly believed the money belonged to them, the judge ruled they had no obligation to investigate the source of the funds. Had the judge ordered the money returned, it would have unfairly punished someone who did nothing wrong and had no ill intent. Because the person wasn't responsible for the error, the court decided the claim should be dropped...
In my view, that’s the only somewhat fair way to handle such a situation. If the person had known they were spending money that wasn't theirs, the story would be entirely different—just as it would be if the mistaken transfer hadn't been spent yet...

It seems this has become established legal precedent, though proving a lack of intent or genuine ignorance is where things likely get complicated...

And that is a very sensitive area. My take? Any misdirected payments would likely fall under a "reasonable expectation of payment" defense.😁

Thomas Ortiz3 said:

quieteagle16 Asks:
Let's be realistic, they'll have to pay it back and figure out a plan for when the liquidator makes it impossible to recover any funds...

I fail to see any legal grounds that would compel an executor to return those funds. The seizure was carried out strictly according to the law, and no regulations were violated during the process. I am writing this in good faith, mind you—foreclosures aren't exactly my area of expertise...

A car is a better analogy because it’s a tangible asset, unlike money which is just digital noise...

Stealing a car is a felony, possessing stolen property is a felony, and selling a stolen vehicle is a felony. In these cases, the burden falls on the owner to prove they didn't know the car was hot...
In this instance, there isn't even a crime or a misdemeanor to speak of. It’s nothing more than simple negligence on the part of someone else entirely—not even the collector... just some third party with no direct connection to them at all...

An executor seized control of the company, and this is what applies: when a portion of one person's assets transfers to another without any legal basis...

The money sitting in a user's account isn't some asset owned by the company. It doesn't even function in a way that would allow for such a claim... which is why you see liabilities that can end up being a hundred times larger than the actual cash on hand...

It seems we’re seeing another instance of selective quoting regarding the law. You missed the specific section I’ve bolded below, which fundamentally alters the entire nature of the foreclosure...

Unjust enrichment without cause. Under Section 1111, if any portion of one person's assets transfers to another without being backed by a valid legal transaction... It comes down to the ruling of a court, or perhaps some other competent authority or legal mandate...The taxpayer is obligated to return it; otherwise, they must compensate for the value of the benefit received...

An attachment can't exactly be considered an acquisition without legal basis if it was carried out under an IRS warrant...

You've got a point there. Legally speaking, everything checks out because the statute just uses the broad term "assets" without making a distinction between possession and ownership, and it even explicitly mentions the possibility of compensation.
But if you ask me, it would make way more sense to treat this as assets held in illegal possession. At the end of the day, money is an asset. Just because it's liquid and digital doesn't mean it can't be treated as a specific unit with clearly defined ownership—otherwise, you could argue you don't actually own the money sitting in your Chase account! If we looked at it that way, the money would automatically be returned by the executor because they were technically holding it illegally. That way, the user's balance stays the same, which feels much fairer since they had nothing to do with the mess in the first place. It would be the cleanest way to fix the whole situation.

Lawrence Cruz said:And that is a very sensitive area. My take? Any misdirected payments would likely fall under a "reasonable expectation of payment" defense.😁

The burden of proof lies (and I'm nearly certain) with whoever received the funds.

By the way, there was a recent situation that's loosely related to this discussion.
Amazon accidentally listed an LCD TV for $100 instead of $1,000 on their site. Hundreds of people jumped on it before the error was caught. Everyone who had already completed their transaction (via credit card, bank transfer...) effectively finalized a contract, meaning Amazon was legally bound to deliver those TVs at the lower price. For anyone who placed an order but hadn't paid yet, the orders were simply canceled. So, if you ever stumble upon a deal like that, pay immediately 😁.

I’m jumping into this thread because a colleague of mine went through a nearly identical nightmare about a year and a half ago.

Basically, after an absolutely brutal day at work, she made a clerical error—she misentered a digit in an account number during a transaction. The woman who was supposed to receive the funds realized the money hadn't hit her account and started complaining, so we called the bank. They contacted the client immediately, of course, because under US law, since I’m just an individual who messed up the transaction (even though it happened via Company A), the bank can't just move money around at will—they have to protect the client, so it becomes a matter between her and them. From what I gathered, they tried calling the guy several times, but he just refused to show up... he even ignored three formal notices from the bank, staying completely MIA. Eventually, the bank told us they were totally stuck because the client wouldn't respond or come in to see a personal banker—and honestly, if they had used security footage to identify him just to force a meeting, it might have backfired and made things look even more suspicious for her. But yeah, he just stayed ghost.

What the bank suggested was that they could release his information, but that requires a court order, which takes forever to process and costs a ridiculous amount of $133 in fees.

The woman was understandably livid—she’d handed over cash directly from her own wallet (this was all regarding a receipt for $1.50)—but there was a complication: her payroll was processed through official channels, yet my colleague had handed the cash over physically, so it looked like the whole thing was being recorded as one shady, unverified transaction.

After waiting a month for that court order, she finally got the client's details, but the bank wasn't exactly rolling out the red carpet for her—there was a massive backlog and long wait times. She tracked down the client, who offered a bunch of excuses, and shortly after, she filed a lawsuit. The police couldn't do anything about it, because from what I understood, the money wasn't "stolen" with criminal intent; it was essentially "gifted" by mistake, so the only recourse is a private civil suit.

Every single time she had to consult with a lawyer—every bit of legal advice—it cost her $167, which the defendant would eventually be liable for along with interest, but getting that money back is another story. In the end, the lawyer ended up costing her about $1000. As for court costs, they were waived for the defendant because he was basically broke—just some student who blew through the money immediately. She spent about eight grueling months dragging herself to hearings, and they weren't even in the same city... at the very last hearing, I think she actually had to cover his travel expenses to get to the courthouse.

She was so close to throwing in the towel. Based on the court's estimate, it wasn't even a huge sum of money; the student only had to pay back the principal plus the cost of one lawyer visit, and if I recall correctly, all her meal expenses over the course of a year. My colleague was right on the edge of a total nervous breakdown—between the exhaustion and the money she bled out in the process, it ultimately wasn't worth it.

In my humble opinion, if something like this happens and the client refuses to sign a withdrawal authorization, unless it's a massive amount of money, you're just fighting a losing battle that isn't worth the stress. So, please... use your head and stay incredibly mindful when doing your accounting work.

^^ I said the exact same thing ten pages ago when we dealt with this same situation... but some people here act like they live in some kind of utopia where if someone gets hit with a lawsuit for money they weren't supposed to receive, they’ll just hand over the principal plus interest, legal fees, a new pair of Nikes, and then go spend ten years doing hard labor on a desert island. ☕

Chris Doyle4 said:Thanks for the advice, I'm gonna give that a shot.

Did you ever get yours sorted out?
I'd love to know how everything turned out in the end.

I ran into a nearly identical situation at work today, so I'm really curious to hear what the final outcome was.

So, I have a bit of a situation and could really use some advice. Basically, I run a small business making and selling custom personal items—I sell through eBay, Facebook Marketplace, and various auction sites. Because it’s a constant flow, people are transferring money to my checking account almost every single day. It’s a lot of moving parts; sometimes someone pays on behalf of someone else, so I end up sending the item to a different address, or I'll wait for a client's paycheck to clear before finalizing a shipment. Honestly, I’ve been burned before too—once I sent an item out thinking the payment was settled, only to find out the receipt they sent me was totally fake. Total nightmare, but that’s a whole other story. Anyway, back to the current mess. I was checking my transactions the other day and noticed a name and an amount that didn't match anything I was expecting—I was waiting on funds from a completely different person and a different total. In the moment, I didn't think twice about it; I just assumed it was part of my daily sales. I ended up spending quite a bit of it—mostly on restocking supplies for my crafts and just general household necessities. It wasn't until I checked my balance later that I realized the math didn't add up. Now I'm spiraling a little because if the bank decides to claw that money back, I’m going to hit a negative balance. To make matters worse, I don't have any overdraft protection on this account. What happens if I end up in the red strictly because of someone else's mistake? I truly believed it was my money—money I had earned through my work. Nobody has reached out to me yet, so I’m just sitting here wondering what my next move should be.

Jason Richardson said:So, I have a bit of a situation and could really use some advice. Basically, I run a small business making and selling custom personal items—I sell through eBay, Facebook Marketplace, and various auction sites. Because it’s a constant flow, people are transferring money to my checking account almost every single day. It’s a lot of moving parts; sometimes someone pays on behalf of someone else, so I end up sending the item to a different address, or I'll wait for a client's paycheck to clear before finalizing a shipment. Honestly, I’ve been burned before too—once I sent an item out thinking the payment was settled, only to find out the receipt they sent me was totally fake. Total nightmare, but that’s a whole other story. Anyway, back to the current mess. I was checking my transactions the other day and noticed a name and an amount that didn't match anything I was expecting—I was waiting on funds from a completely different person and a different total. In the moment, I didn't think twice about it; I just assumed it was part of my daily sales. I ended up spending quite a bit of it—mostly on restocking supplies for my crafts and just general household necessities. It wasn't until I checked my balance later that I realized the math didn't add up. Now I'm spiraling a little because if the bank decides to claw that money back, I’m going to hit a negative balance. To make matters worse, I don't have any overdraft protection on this account. What happens if I end up in the red strictly because of someone else's mistake? I truly believed it was my money—money I had earned through my work. Nobody has reached out to me yet, so I’m just sitting here wondering what my next move should be.

How long ago was the deposit made?

P.S. Is it even possible for someone to make a deposit using someone else's name...

Look, there's no way the bank can just reach into your account and pull money out without you signing off on it. Since the transfer is already cleared and posted, they’re basically powerless at this point. Your only move is to sit tight and wait for someone from the bank to actually do their job and contact you about the error. Until then, good luck. 😉

I’ve gone through everything—really, I mean it—multiple times. Every single payment, every shipment I’ve sent out, all my emails and messages. There is absolutely no trace of that name anywhere, nor any amount even remotely close to what we're talking about, and certainly nothing indicating someone paid on behalf of another person. It's just... nothing. I'm still waiting, though. Honestly, I think I’ll head down to Chase to have them look into the transaction personally—maybe then I'll get some clarity on that name. I can't tell if this was done via online banking, an in-branch transfer, or perhaps through some other bank entirely... I really don't know where the error lies. Regardless, it doesn't matter who's at fault; I fully intend to return the money once I figure out who it actually belongs to. It isn't a massive fortune, but it's certainly not pocket change either. I know how it feels when you're expecting something to land in your account... I need to get this sorted out. Wish me luck. 🙂
p.s. It's been 4 days now.

I actually tracked down the woman who made the payment—she gave me her transfer number, the exact amount, and her full name—so I was able to get her money sent right back to her... 🙂 Everything was settled perfectly! Now I’m going to head off and enjoy some peace and quiet while I work on my crochet 🙂))