We have a situation where a teller had deposited funds into the wrong (owned by a different customer) account. The customer, who did not recieve the funds deposited did not notify the bank until after 60 days however the bank would like to give the funds back anyhow. Question is the customer that recieved the deposit in error has never notified the bank (imagine that) and the bank would like to debit this customers account to get the funds back rather than writing off the mistake. It would make this customer overdrawn as well. Any issues that may come with that?

No - because you would sue him anyway for unjust enrichment. Bank error collect $200 only happens in Monopoly.

The only issue is how you will handle the indignant response you're likely to get from the customer whose account you will debit. The fact that he or she doesn't have a leg to stand on won't deter the customer from yelling "Foul." But the fact is that Monopoly rules ("Bank Error in your favor. Collect $200.") don't control the real world.

You might consider -- I think it's fair under the circumstances -- waiving the overdraft fee that your debit is more than likely to trigger. But that's about as far as I would go.

It's unlikely that your contract language which attempts to limit customer disputes to 60 days covers deposits; generally the requirement to review a statement promptly is limited to debits. Giving the customer the money back when your teller made the mistake was probably your only legal option.

As for the customer who benefitted, albeit temporarily, from your teller's mistake, the money was deposited without notice and I would take it back without advance notice or discussion. However, my cover letter (which included copies of all the relevant documentation) would say that we would waive all overdraft fees resulting from our error. Keep in mind, if reversing the deposit creates an overdraft there may be outstanding checks that would increase the amount of the overdraft even more. I would not charge any overdraft fees for those items and would allow the overdraft to go as high as the amount of the deposit I had just reversed.

As cynical as I am, I believe that no more that 15% of the population actually balances its bank statement and, unless the deposit was unusually large for the customer who benefitted, she probably did not notice.

While I agree with the above posters I would like to add that my decision would also be dependent on the dollar amount of the claim. If it was a small amount (bank should decide what is small and not me) I would just write it off as it would not be worth the time and unjust reputation risk.

I agree that waiving the OD fees for the customer being debited seems like the fair thing to do. I'd also provide a detailed letter explaining what the debited customer can expect to happen with their account. My personal opinion is that the more they understand what's happening to their account, the less likely they are to complain about it.

I agree with all the above comments. I am on the same line as EdAudit, if it was a small dollar item, I would consider just writing it off. That comfort level is different for any bank. I would also waive OD fees for the customer's whose account is being debited for the funds.

Just one other thought. Although the customer who has had the use of the funds since the error occurred should have notified the bank when the funds appeared in the account and most definitely should not have considered the funds as belonging there, you have to allow for reality. One way you might do so (notice I am not saying this is necessary) is to allow the same sort of 5-day overdraft coverage as the provision in Regulation E section 1005.11 relating to taking back all or part of a provisional credit.

agree with above, and will add that if it is a large amount and the customer easily should have recognized the error deposited to his account, you may wish to consider ending the relationship with them.

I had a deposit made to my account in error once, low 5-figure amount, clearly not mine (i was in college and rarely had $5, much less 5 figure balances). I notified the bank and they said they would take care of it. After a week it was still there, so i moved it to a savings account to accrue interest (back in the day when interest rates were over 10%, yeah, i'm old). Took them almost 3 months, and they were quite indignant when they realized their error and basically accused me of fraud. I simply went in and had a nice discussion with the irate manager - showing him my letter and their response when i notified them several months back. His tone changed greatly, when he saw the response had come from his boss.