We've recently uncovered a bit of a mess with our debit card processing, a $35,000 outage in our settlement account. It looks like at least ~$12,000 of that occurred in a single event back in December of 2008.

Before we decide whether we want to go after these transactions, we figured we should find out if we CAN. Regulations all seem geared towards notification of errors by consumers - the only thing I can see applying is Michigan's statute of limitations? Am I missing something here?

Thanks!

Which way are these transactions flowing - debiting your customers or customer of other banks?

Debiting our customers.

Our customer went to Walmart in December 2008, bought a Walkman and a Betamax player, paid with their debit card (issued by us) - and due to some processing errors and lack of controls, it never hit their account. It just got lost in a wash account.

(It occurs to me, by the way, that I may have put this in the wrong forum. Apologies...)

I know of no limitations, the customers owe you money. The only question: Is it worth $35,000 for the PR nightmare you are about to unleash?

Well, exactly. I'm leaning towards recommending that we write off the $35k and move on.

We are a credit union - meaning there's something of another side to it: that $35,000 belongs to the membership as a whole, some of whom buy into the idea of ownership and object to the idea of paying for someone else's lunch.

He bought $12,000 worth of stuff at Wal Mart?

A Betamax and a Walkman? Are we sure this wasn't 1988 instead of 2008? And those two items couldn't have cost anywhere near $12,000.00.

We had a problem many, many years ago where ATM transactions happening between like 2 and 3 AM hit our bank account, but never hit the customers. Reviewing logs, many of these users knew it too and there was obvious theft/fraud on their parts as they would max the daily limit every day. When the problem was corrected, they stopped the pattern. Some closed their accounts. The bank went after them with a vengeance and was prepared to include the police. We recovered most to the best of my knowledge. I wasn't directly involved. I do know it was a lot more than you have here. But they owe the money and you have the right to collect it. I see the PR side, but I'd want my money.

The $11k is made up of around 600 transactions. I doubt any of them were for a betamax or a walkman, though, geez, they might as well have been.

Thanks for the counterpoint Andy. There isn't an easy answer, but this on top of the other research I've done makes it clear enough, I think, that we CAN go after the money. We'll have to see if the board actually wants to do that.

The other $24k is still a mess, by the way. The settlement account became a "I'm not sure where this goes, I'll just toss it in here" account.

It's clear that whoever was doing this CU's auditing or managing the account in question before you came along was not doing his or her job. No auditor worth the title would permit a suspense account to be abused that way without airing the dirty laundry in a report to senior management and the CU's board.

For some small CUs this suspense account could represent a major hit to capital accounts.

$11K and 600 accounts averages $18 per. Take it and run. Why should the FI lose this money for no reason?

As to the $24K, if it is a sausage (no clearly identifiable parts) you can't hold any one customer responsible. Put some mustard on it and eat it.