Recourse for a Direct Deposit to wrong bank account | Income tax filing | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

No permission to create posts
sp_Feed Topic RSS sp_TopicIcon
Recourse for a Direct Deposit to wrong bank account
June 2, 2023
11:41 am
frugal lady
Member
Members
Forum Posts: 191
Member Since:
February 20, 2013
sp_UserOfflineSmall Offline

My daughter in law finally decided to register for auto deposit of funds from CRA.
However, she made a typo of the branch number and funds owing her have in fact been deposited to someone else's account. Her Bank says there is nothing they can do.
CRA says it should have been kicked back to them cause of wrong name but it has not.
Is there any hope of the funds being retrieved? Any advice?

June 2, 2023
1:42 pm
Dean
Valhalla Mountains, British Columbia
Member
Members
Forum Posts: 1857
Member Since:
January 12, 2019
sp_UserOfflineSmall Offline

.
The CRA can't/won't take the money back from the wrong person ?!

Hmm sf-confused

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

June 3, 2023
8:06 am
Norman1
Member
Members
Forum Posts: 6606
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

There is only a three business day window for CRA and its bank to correct a direct deposit. Even then, the direct deposit recipient has 90 days afterwards to refuse the correction. See previous post.

After that window closes, CRA would need to pursue the recipient outside the banking system, like through its tax collection powers.

June 3, 2023
4:34 pm
frugal lady
Member
Members
Forum Posts: 191
Member Since:
February 20, 2013
sp_UserOfflineSmall Offline

Norman1 said
There is only a three business day window for CRA and its bank to correct a direct deposit. Even then, the direct deposit recipient has 90 days afterwards to refuse the correction. See previous post.

After that window closes, CRA would need to pursue the recipient outside the banking system, like through its tax collection powers.  

Thanks for the information. I find this unbelievable that a direct deposit recipient of funds not intended for him/her can refuse a correction to correct the deposit and has 90 days yet to do so!!. Something is wrong with this system. But who am I, Joe Blow average "honest" person.
Do they need a "reason" to refuse the correction or they can just "refuse."??
I'm sure the 3 day business window passed due to the FI of my daughter in law taking its sweet time to return phone calls.

June 3, 2023
6:15 pm
Norman1
Member
Members
Forum Posts: 6606
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

No reason needed. Just that the correction debit is "unauthorized". Same as if some fitness club I never heard of starts debiting money out of my chequing account.

As far as her financial institution is concerned, your daughter-in-law has no legal standing in the matter yet because CRA originated the direct deposit and not her. CRA needs to be involved.

Her financial institution also made no error. It delivered the funds to the exact branch and account number the sender, CRA, instructed.

She is in a similar situation as Credit Suisse was when it wired $1.5 million to the wrong account.

There's nothing wrong with the system. The rules around direct deposits and wire transfers, by design, give certainty to the fund recipient. Otherwise, the recipient wouldn't immediately fulfill their part of an agreement, like hand over the keys to a house, on seeing the wire transfer or direct deposit appear in their bank account. That's also why a bank normally places no holds on funds arriving by direct deposit.

June 3, 2023
7:55 pm
frugal lady
Member
Members
Forum Posts: 191
Member Since:
February 20, 2013
sp_UserOfflineSmall Offline

Norman1 said

Her financial institution also made no error. It delivered the funds to the exact branch and account number the sender, CRA, instructed.

So the "name of the recipient" has no bearing in the proper deposit of funds?
CRA is saying FI should have returned the deposit because the account name didn't match.

June 3, 2023
9:03 pm
Norman1
Member
Members
Forum Posts: 6606
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

I'm not aware of any Payments Canada requirement for a financial institution to also match the "Payee Name" field of a direct deposit against the name on the receiving account. I think that's up to each financial institition.

I suspect financial institutions typically don't and do a match on the institution, transit, and account numbers only.

I haven't heard any stories about payroll deposits of women being rejected because she changed her name after getting married and updated her name at work before she updated her name on accounts at the bank.

June 3, 2023
9:23 pm
AltaRed
BC Interior
Member
Members
Forum Posts: 2743
Member Since:
October 27, 2013
sp_UserOnlineSmall Online

My spouse has been quite sloppy over the years with use of her first name on occasion, and her second name as her first name sometimes. I never know which one she is going to use on documents, but it does not seem to matter to her various bank accounts which 'first' name is used on the deposit.

June 4, 2023
3:30 am
cgouimet
Member
Members
Forum Posts: 1406
Member Since:
February 7, 2019
sp_UserOfflineSmall Offline

Norman1 said
No reason needed. Just that the correction debit is "unauthorized". Same as if some fitness club I never heard of starts debiting money out of my chequing account.

As far as her financial institution is concerned, your daughter-in-law has no legal standing in the matter yet because CRA originated the direct deposit and not her. CRA needs to be involved.

Her financial institution also made no error. It delivered the funds to the exact branch and account number the sender, CRA, instructed.

She is in a similar situation as Credit Suisse was when it wired $1.5 million to the wrong account.

There's nothing wrong with the system. The rules around direct deposits and wire transfers, by design, give certainty to the fund recipient. Otherwise, the recipient wouldn't immediately fulfill their part of an agreement, like hand over the keys to a house, on seeing the wire transfer or direct deposit appear in their bank account. That's also why a bank normally places no holds on funds arriving by direct deposit.  

And, according to Frugal Lady, the CRA didn't do anything wrong either since it sent the funds to the account specified by the daughter in-law.

CGO
June 4, 2023
3:31 am
cgouimet
Member
Members
Forum Posts: 1406
Member Since:
February 7, 2019
sp_UserOfflineSmall Offline

I am surprised there is no validation of correct deposit account information by the CRA. Like micro deposits ...

CGO
June 4, 2023
6:56 am
AltaRed
BC Interior
Member
Members
Forum Posts: 2743
Member Since:
October 27, 2013
sp_UserOnlineSmall Online

Would that not only verify that the actual account number exists? Not who are the owners of that account? CRA receives about 30 million tax returns a year and for this tax year to May 29th, there have been 13,035,924 refunds by direct deposit.
https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/individual-income-tax-return-statistics.html

A good portion of those would have the same direct deposit information on file this year as in previous years but many would not due to first time direct deposit or changing bank accounts. Perhaps 1M of them? 2M? How much parenting should CRA do?

June 4, 2023
7:38 am
cgouimet
Member
Members
Forum Posts: 1406
Member Since:
February 7, 2019
sp_UserOfflineSmall Offline

AltaRed said
Would that not only verify that the actual account number exists? Not who are the owners of that account? CRA receives about 30 million tax returns a year and for this tax year to May 29th, there have been 13,035,924 refunds by direct deposit.
https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/individual-income-tax-return-statistics.html

A good portion of those would have the same direct deposit information on file this year as in previous years but many would not due to first time direct deposit or changing bank accounts. Perhaps 1M of them? 2M? How much parenting should CRA do?  

The way this works with Hubert for example is when you set up a link to an account, Hubert sends two small deposits (pennies) to that account. Once you receive the small deposits you go back to Hubert and confirm the value of each deposit. Only then will the link be enabled.

CGO
June 4, 2023
9:26 am
AltaRed
BC Interior
Member
Members
Forum Posts: 2743
Member Since:
October 27, 2013
sp_UserOnlineSmall Online

cgouimet said

The way this works with Hubert for example is when you set up a link to an account, Hubert sends two small deposits (pennies) to that account. Once you receive the small deposits you go back to Hubert and confirm the value of each deposit. Only then will the link be enabled.  

I have used micro-deposit a few times to establish such links and that has been highly appreciated, but do you really think CRA is going to (should) do that on your behalf? Why should they make the micro-deposits and wait for you to cycle back to CRA on MyAccount to validate the link? Is that the sort of thing you would expect employers to also do for direct deposits? Neither CRA nor employers are banks and they should have reason to expect individuals to know what they are doing and to be responsible for their actions.

What do you do for the likes of those on this forum who do not wish to do financial transactions (or almost anything including email access to MyAccount) electronically but still want refunds direct deposited?

To put it into perspective, I am responsible for making sure I send e-transfers to the right email address (recipient). It follows that I am fully responsible for direct deposits, pre-authorized debits, etc.

June 4, 2023
9:46 am
cgouimet
Member
Members
Forum Posts: 1406
Member Since:
February 7, 2019
sp_UserOfflineSmall Offline

AltaRed said

I have used micro-deposit a few times to establish such links and that has been highly appreciated, but do you really think CRA is going to (should) do that on your behalf? Why should they make the micro-deposits and wait for you to cycle back to CRA on MyAccount to validate the link? Is that the sort of thing you would expect employers to also do for direct deposits? Neither CRA nor employers are banks and they should have reason to expect individuals to know what they are doing and to be responsible for their actions.

What do you do for the likes of those on this forum who do not wish to do financial transactions (or almost anything including email access to MyAccount) electronically but still want refunds direct deposited?

To put it into perspective, I am responsible for making sure I send e-transfers to the right email address (recipient). It follows that I am fully responsible for direct deposits, pre-authorized debits, etc.  

I agree with you. But I do think it's something that would help many feel less uncomfortable with electronic transfers.

Also, I have had many links for years and the CRA is the only one I recall that didn't require some sort of validation such as micro deposits or void cheques or other means.

CGO
June 4, 2023
10:05 am
AltaRed
BC Interior
Member
Members
Forum Posts: 2743
Member Since:
October 27, 2013
sp_UserOnlineSmall Online

I assume you strictly mean links for fund transfers between bank/CU accounts? I've set up many pre-authorized debits to bank accounts and charges to credit cards over the years without any validation requested. I also set up some direct deposits for annuity/pension income to my bank account without validations, void cheques, etc. I think you may be expecting too much from such relationships.

However, to get back to the OP's issue, I think it will take, as I think Norman1 already said, a request to CRA to have them try to action a retrieval on the DIL's behalf. I agree with Norman1 that logically neither the recipient nor the bank can (or should) initiate any action.

Otherwise, it may need to be considered as a life lesson to be more careful next time. All of us have experienced life lessons from time to time.

June 4, 2023
10:14 am
savemoresaveoften
Member
Members
Forum Posts: 2622
Member Since:
March 30, 2017
sp_UserOfflineSmall Offline

bad mistake. Some costs less, some costs more, learn from it.

CRA has done nothing wrong. All this would not have happened if the correct account info was supplied.

The involving bank also does nothing wrong either.

It may be unfortunate but it is what it is. Thats why one has to be careful when it comes to money issue especially online.

June 4, 2023
10:54 am
cgouimet
Member
Members
Forum Posts: 1406
Member Since:
February 7, 2019
sp_UserOfflineSmall Offline

savemoresaveoften said
bad mistake. Some costs less, some costs more, learn from it.

CRA has done nothing wrong. All this would not have happened if the correct account info was supplied.

The involving bank also does nothing wrong either.

It may be unfortunate but it is what it is. Thats why one has to be careful when it comes to money issue especially online.  

Indeed

CGO
June 4, 2023
12:42 pm
Dean
Valhalla Mountains, British Columbia
Member
Members
Forum Posts: 1857
Member Since:
January 12, 2019
sp_UserOfflineSmall Offline

.
That's a Tough (& expensive?) lesson for Frugal Lady's daughter-in-law. Sad sf-frown

I have a Great Fear of doing the same thing when dealing with $$$ online. I check things twice (and even three or four times), before hitting 'ENTER'. And then after I'm finished, I Still worry I might have somehow Goofed.

"Measure Twice (or more) ... Cut Once"

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

June 4, 2023
2:32 pm
frugal lady
Member
Members
Forum Posts: 191
Member Since:
February 20, 2013
sp_UserOfflineSmall Offline

Dean said
.
That's a Tough (& expensive?) lesson for Frugal Lady's daughter-in-law. Sad sf-frown

Yes indeed a tough and expensive lesson for a family who needs every dollar they receive to make ends meet on a monthly basis. Bad mistake and very unfortunate. I will advise if anything "good" transpires in the end.

June 4, 2023
2:55 pm
Norman1
Member
Members
Forum Posts: 6606
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Daughter-in-law should see if CRA would contact its bank. Its bank can then ask her bank to contact the unintended recipient at the other branch and explain the situation.

With information from his/her bank and from CRA, the unintended recipient may be willing to dispute the direct deposit. That would cause the direct deposit to be bounced back to CRA's bank with reason "Customer Initiated Return".

That is the least expensive route to recover the funds. The daughter-in-law does have the legal right to recover her tax refund from the unintended recipient. But, that right will need to be confirmed by a court judgment should the recipient be not willing to return the money voluntarily.

No permission to create posts

Please write your comments in the forum.