Is It A Crime To Keep Wrongly Transferred Money?

Is It A Crime To Keep Wrongly Transferred Money? Yes, keeping wrongly transferred money can be considered theft or fraud, as the rightful owner can demand its return.

1. Introduction

Getting money in your bank account by mistake can occur to anyone. Whether it is an honest clerical mistake, a bank glitch, or an error on someone’s part, the outcome is the same: you have money that wasn’t meant for you. But what do you do if you see the money? Can you keep it, or is that against the law?

The idea of retaining errantly transferred money might be alluring, especially if you didn’t ask for it and hadn’t made any mistakes yourself. [Is It A Crime To Keep Wrongly Transferred Money]

However, retaining such money might be illegal under certain circumstances. In this article, we’ll discuss the legality of retaining errantly transferred money, the likely consequences, and the right response you should take when faced with such a situation.

2. What Is Wrongly Transferred Money?

Definition

Wrongly transferred money refers to cash that has been sent to your bank account erroneously. It could be because the sender mistakenly did it, or perhaps a technical glitch or system breakdown on the bank’s end.

Money is sometimes moved from one account to another with the wrong person at times because of human mistakes, incorrect numbers, or even scams. Whatever the motive, the upshot is that you find yourself with money that was not intended for you.

It may seem like a stroke of luck at first, but the error might lead to serious complications, both legal and financial, if the money is not repaid quickly. [Is It A Crime To Keep Wrongly Transferred Money]

Causes

There are a few ways money can land in the wrong account:

Human Error: Humans make mistakes, and sometimes one can type in the wrong account number or send the wrong amount and, without realizing it, send money to the wrong person. For instance, an accidental keystroke when typing a bank account number can send the money to someone who is not even aware of the sender.

Banking Errors: Sometimes, banks may experience system errors or failure that causes transfers to fail. For example, a technical error in an online banking system may cause money to be sent to the wrong account, or a mistake could be made when bank staff process a transaction.

Payment Apps and Transfers: With the growing use of online payment platforms like Venmo, PayPal, Zelle, and so on, it’s more likely than ever for things to go wrong. One small typo in an email address or phone number can result in money being sent to the wrong person.

Such errors can happen to anyone, but there are the possible legal consequences of keeping the mistakenly deposited money. [Is It A Crime To Keep Wrongly Transferred Money]

3. Legal Ramifications of Keeping Falsely Sent Money

Theft and Fraud

It is simple to consider money which you didn’t get to begin with a “gift” or “windfall.” However, in the majority of legal jurisdictions, this is far from the case. Legally, keeping money that has been sent to you by mistake can be legally termed as theft or fraud.

Stealing can be defined as the unlawful acquisition of another’s property with the aim of depriving the owner of it for good. Fraud, on the other hand, is deception to gain an economic advantage. When you know that you possess money that was mistakenly sent to you, you can term this profiting from someone else’s mistake.

Even if you never intended to appropriate the money by stealing, many jurisdictions have statutes that protect institutions and individuals from the wrongful retention of funds.

The determining factor here is knowledge — should you know, or reasonably have known, the money wasn’t yours, your retention of the money could be a crime. [Is It A Crime To Keep Wrongly Transferred Money]

Legal Framework

Statutory law governing mistakenly transferred funds is influenced by a variety of legal principles, including conversion (unlawful acquisition or possession of another’s property), fraud, and theft.

These principles vary slightly from jurisdiction to jurisdiction but share essentially the same principle: If it ain’t yours and you know it, you owe someone an obligation to return it.

For example, in the United States, keeping mistakenly transferred funds may be a “conversion,” a civil tort that occurs when someone takes possession of property without permission.

The property owner is entitled to have their money returned to them, and they can enforce this through the courts, even if the transaction occurred accidentally. [Is It A Crime To Keep Wrongly Transferred Money]

In United Kingdom law, Theft Act of 1968 makes the point that if you receive money you knew was obtained fraudulently or by mistake, then it is theft.

This means that, in effect, if you receive money that’s not yours and don’t take any effort to pass it back on, criminal prosecution is warranted.

Consequences

The repercussions of maintaining incorrect transferred funds differ depending on the size of the mistake, the amount of money transferred, and jurisdiction law. There are, however, two main types of repercussions overall: criminal and civil.

Criminal Penalties: In most instances, keeping money wrongly deposited can result in criminal prosecution. Fraud or theft charges might attract heavy fines, a criminal record, or imprisonment if the crime is serious enough. [Is It A Crime To Keep Wrongly Transferred Money]

Civil Penalties: In addition to criminal charges, you may also be sued civilly. The person who mistakenly sent you the money can sue you to have the money returned. Civil actions could result in the money being forced from you, costs of court paid, and possibly other damages.

Bank Penalties: In some cases, the bank that made the incorrect transfer may impose penalties or place your account in hold until the funds are reversed. Banks have an obligation to track any errors, and they can act with haste to recover the money for the rightful owner.

4. What If You Leave Wrongly Transferred Money?

Criminal Consequences

If the authorities discover this, having mistakenly transferred funds could result in criminal charges. Whether it will be fraud or theft depends on the circumstances and value of the money. [Is It A Crime To Keep Wrongly Transferred Money]

Small Offenses: If the amount is relatively small, the offense could be less serious, but criminal prosecution is conceivable. For example, if you received $50 or $100 by mistake, you may not receive a serious criminal sentence, but you may be charged with theft.

Larger Amounts: If the wrong transfer is a significant amount of money, the sanctions are greater. For example, mistakenly holding onto several thousand dollars can lead to felony charges and hefty legal penalties.

Civil Penalties

Even if criminal charges are not pursued by the authorities, the money owner may sue in a civil case for recovery of the money. You may be instructed to give the money and also pay legal expenses, court charges, and possibly even damages for lost time.

Legal Fees: If the case goes to court, you can end up with huge legal bills, either if you win or lose. This is yet another valid reason to act quickly and refund the money before things escalate to court.

Damages: Depending on the circumstances, you could also be liable for damages if the misappropriated funds caused harm or loss to the original owner.

Real-Life Examples

Numerous real-life cases demonstrate the serious consequences of being in possession of funds transferred in error. [Is It A Crime To Keep Wrongly Transferred Money]

One such notable case was a woman to whom a bank accidentally transferred $31 million. She spent the money instead of giving it back and was subsequently arrested and charged with theft and money laundering.

In one case, a man was sent $4,000 by mistake. He spent it, claiming he didn’t know there was a mistake. The bank sued him, and he eventually had to pay the full amount, plus court fees.

These examples illustrate the criminal and civil penalties you may incur for retaining money that wasn’t meant for you.

5. How Do You Handle Money Sent in Error?

What to Do Immediately

If you notice that funds have been deposited into your account in error, you need to act fast. This is what you do:

Notify Your Bank: Call your bank or payment firm immediately and notify them of the mistake. They will typically have ways of reversing the transaction or paying back the money to the rightful owner. [Is It A Crime To Keep Wrongly Transferred Money]

Contact the Sender: If possible, reach out to the sender or the financial institution that made the error to inform them of the mistake. This will show that you’re acting in good faith and willing to return the money.

Don’t Spend the Money: Don’t spend a penny of the money that was mistakenly transferred. Even though it may be tempting, spending the money would technically constitute fraud or theft, and you would be responsible.

Legal Obligation

By law, you are obligated by law to return the money. Even if you did not commit the mistake, if you realize that the money is not yours, you must behave in such a manner that it is returned. Failure to do so or simply ignoring the mistake will result in legal action and financial penalties.

See Also: Is It A Hate Crime To Burn A Flag? The Legal Debate

6. Exceptions and Grey Areas

Innocent Mistakes

In some cases, you might not even be aware the money was transferred in error. For instance, if the amount is trivial or you did not realize the mistake immediately, you might not even be aware the money was mistakenly sent to you. In that event, the law will likely be lenient, particularly if you acted reasonably to repay the money upon realization of the mistake.

Good Faith Purchases
If you’ve already spent the money when you’ve caught on to the mistake, you’re in trouble. In some states, honest mistake in spending the money may insulate you against prosecution if you can show you didn’t know it was an error.

It doesn’t release you from liability, though. You could still be compelled to pay the owner. [Is It A Crime To Keep Wrongly Transferred Money]

7. Final Verdict: Is It A Crime To Keep Wrongly Transferred Money?

Briefly, it is largely illegal to hold money transferred in error. Even though it may be enticing to hold money not meant for you, holding money so transferred has serious legal consequences, both criminal and civil.

In case, at any point, you are holding money sent to your account by mistake, the best action to take would be to report to your bank, contact the sender, and return the money forthwith.

8. FAQs

What if you notice an erroneous transfer?

Inform your bank immediately and report the error. They will guide you through how to reverse the money. [Is It A Crime To Keep Wrongly Transferred Money]

Can you be held liable if you unknowingly spend erroneously transferred funds?

Yes, if you knowingly or unknowingly spend the money, you could still be charged with theft or fraud.

How do you prove you didn’t know about the mistake?

You may have to prove that you acted in good faith, say, by reporting the bank immediately you realized the error.

Are there any exceptions when you do not have to pay back the money?

If you did not know about the error, and you acted in good faith, you may not be prosecuted, but you should refund the money. [Is It A Crime To Keep Wrongly Transferred Money]

What if the transfer is a small amount, does that make a difference?

The amount doesn’t change your legal obligation to repay the money. But smaller amounts may not result in criminal prosecution in some cases.