Mistakenly Transferred Money to the Wrong Account? Here’s What To Do (2024)

The ePayments Code is a voluntary code of practice that banks and other electronic payments providers subscribe to. Typically, in the terms and conditions between you and your bank, there will be a clause in which the bank is obliged to comply with the ePayments Code and therefore a contractual right that you can enforce against the bank[2].

Relevantly, amongst other things, the ePayments Code prescribes the rules which determine who pays for unauthorised transactions and the how mistaken internet payments can be recovered.

The ePayments Code applies to a wide range of electronic payments provided by banks[3]:

(a) electronic card transactions, including ATM, EFTPOS, credit card and debit card transactions that are not intended to be authenticated by comparing a manual signature with a specimen signature,

(b) telephone banking and bill payment transactions,

(c) pay anyone banking facility transactions,

(d) online transactions performed using a card number and expiry date,

(e) online bill payments (including BPAY),

(f) transactions using facilities with contactless features and prepaid cards, not intended to be authenticated by comparing a manual signature with a specimen signature,

(g) direct debits,

(h) transactions using electronic toll devices,

(i) transactions using mobile devices,

(j) transactions using electronic public transport ticketing facilities,

(k) mail order transactions not intended to be authenticated by comparing a manual signature with a specimen signature, and

(l) any other transaction specified by ASIC under clause 44 as a transaction to which the ePayments Code applies.

There are exceptions and modifications which apply to low value facilities, small businesses, and BPAY payments.

Banks can deposit money into the wrong account for various different reasons and it is important to distinguish between the different categories of mistaken bank transfers.In all cases it is important that you contact your bank immediately.

Mistaken internet payments

This page is primarily concerned with mistaken internet payments i.e. funds transmitted using a pay anyone banking facility that are sent to an unintended recipient.There are various important obligations upon banks which relate to disclosure of terms and conditions (clause 26), on screen warnings (clause 27), reporting (clause 28), and investigation (clause 29).The applicable process depends on whether or not there are sufficient funds in the recipient’s bank account to repay you, and how quickly you make your report to the bank:

In short, if a report is made within 10 business days of making the mistaken internet payment, and there are sufficient funds available in the recipient’s account to repay the mistaken payment, then the recipient’s bank must return the funds to your bank within 5 – 10 business days of receiving a request from your bank.

If your bank is not satisfied that a mistaken internet payment has occurred, then it can still seek the consent of the unintended recipient to return the funds.

The process is less easy if more time has passed.

In short, if a report is made between 10 business days and 7 months after making the mistaken internet payment, and there are sufficient funds available in the recipient’s account to repay the mistaken payment, the receiving bank must:

– complete its investigation into the reported mistaken payment within 10 business days of receiving a request.

– Prevent the unintended recipient from withdrawing the funds for 10 further business days

– Notify the unintended recipient that it will withdraw the funds from their account, if the unintended recipient does not establish that they are entitled to the funds within 10 business days commencing on the day the unintended recipient was prevented from withdrawing the funds

If the unintended recipient does not establish that they are entitled to the funds within 10 business days then the recipient’s bank must return the funds to your bank within 2 business days thereafter.

If both your bank and the recipient’s bank are satisfied that there has been a mistaken internet payment, the recipient’s bank must exercise discretion[8], based on an appropriate weighing of interests of both the sending consumer and unintended recipient and information reasonably available to it about the circ*mstances of the mistake and the unintended recipient, in deciding whether it should:

(a) pursue the return of funds to the total value of the mistaken internet payment,

(b) pursue the return of funds representing only a partial amount of the total value of the mistaken internet payment, or

(c) not pursue any return of funds (whether partial or total).

The recipient’s bank has a discretion to for example seek the repayment of funds by instalments under clause 34.4 and clause 34.6 guides on the exercise of that discretion.

There are requirements on banks at clauses 35 and 36 to inform bank account holders of the outcome of their reported mistaken internet payment and their right to complain to the bank internally.

If the bank account holder is not satisfied about the outcome of a complaint, they can complaint to AFCA about the bank (covered below).

between the different categories of mistaken bank transfers.

In all cases it is important that you contact your bank immediately.

Unauthorised transactions

Unauthorised transactions are treated differently.

An unauthorised transaction means a transaction that is not authorised by a user. It does not include any transaction that is performed by a user themselves or by anyone who performs a transaction with the knowledge and consent of a user.[9]

Clause 10 of the ePayments Code stipulates various circ*mstances when a bank account holder is not liable for loss arising from an unauthorised transaction.

Clauses 11 of the ePayments Code stipulates various circ*mstances when a bank account holder is liable for loss arising from an unauthorised transaction.

Clause 17 of the ePayments Code deals with the process for reporting unauthorised transactions. If there has been theft, you should also report the matter to the Police. Clauses 18 and 19 of the ePayments Code prescribes the timeframes for the bank’s response to a report of an unauthorised transaction.

important to distinguish between the different categories of mistaken bank transfers.

In all cases it is important that you contact your bank immediately.

Payments made due to system or equipment malfunction

Clause 14 of the ePayments Code prescribes the circ*mstances in which a bank will normally be liable for loss caused by system or equipment malfunction.

Chapter F of the ePayments Code deals with complaints and applies to banks that are an Australian financial services licensee, unlicensed product issuer, unlicensed secondary seller, Australian credit licensee or credit representative.

Complaints can be made to AFCA and Financial Ombudsman Service Australia

If it appears to the Court that:

(a) the applicant, having made reasonable inquiries[11], is unable to sufficiently ascertain the identity or whereabouts of a person (the person concerned) for the purpose of commencing proceedings against the person, and

(b) some person other than the applicant (the other person) may have information, or may have or have had possession of a document or thing, that tends to assist in ascertaining the identity or whereabouts of the person concerned,

then the court may make either or both of the following orders against the other person:

(a) an order that the other person attend the court to be examined as to the identity or whereabouts of the person concerned,

(b) an order that the other person must give discovery to the applicant of all documents that are or have been in the other person’s possession and that relate to the identity or whereabouts of the person concerned.

The recipient’s bank can generally be summoned by the Court under this provision to provide the identity and whereabouts of the recipient of the mistaken internet payment. This should then enable you to determine whether or not you wish to issue legal proceedings against the recipient to recover your money.

[1] https://asic.gov.au/regulatory-resources/financial-services/epayments-code/

[2] Clause 4.2 of the ePayments Code

[3] Clause 2.5 of the ePayments Code

[4] Clause 30 of the ePayments Code

[5] Clause 31 of the ePayments Code

[6] Clause 32 of the ePayments Code

[7] Clause 34 of the ePayments Code

[8] ASIC expects an overarching factor in this exercise of discretion will be that it should generally be accepted that an unintended recipient should not consider themselves entitled to funds that are not theirs and note also clause 34.5

[9] Clause 2.6 and 9.3 of the ePayments Code

[10] identity or whereabouts includes the name and (as applicable) the place of residence, registered office, place of business or other whereabouts, and the occupation and sex, of the person against whom the applicant desires to bring proceedings, and also whether that person is an individual or a corporation.

[11] Objectively not subjectively