We have a customer who found that he did not receive credit for a deposit that he made on 12/30/09. We researched and found that it was credited to another customer with a similar account number. This was a bank error; therefore, we felt that although he was outside of his 90 days, it was in the best interest of the bank to provide credit to him for this deposit. We are unsure whether we should just drop it, or whether to contact the customer who recieved credit and set up a payment plan to reimburse the bank. How would you handle?

I agree you should credit the customer who was not credited the deposit. As for going after the other customer, how much was this erroneous deposit?

My thoughts are I'd be hesitant to call a customer and tell them this error from so long ago...if it was not a huge deposit, I think I'd just write it off.

Don't forget that if a financial institution cancels a debt in an amount greater than $600, the amount of the debt so cancelled must be reported to the IRS unless a specified exception exists (see IRS Code Section 6050P).

you can bet the customer thinks every month when his statement comes that at some point you're coming back to him for the money...my 2 questions are how much are we talking and is it worth losing the customer over? personally, i'd be going back to him for the money...

of course, you may want to look at your deposit contract first and see what it says about when you can come back to them. if you limit time on bank errors, you may have answered your own question

It was $1,000. The only account the customer has with us is a low balance checking account.

$1000? I wouldn't worry about losing this customer. They had to know it wasn't their money. I'd give them 30 days to repay it. If they don't, write it off, close their account, and hand them a 1099-C for the debt forgiven.

Hassling with a repayment plan for a low-balance, less-than-honest customer will be more trouble than it is worth.