Banks

$10,000 wire transfer disappears after bank puts it in the wrong account

It’s been advertised as a safe and reliable way to send money, but the Ontario couple claim the $10,000 wire transfer they sent to their adult son was deposited into a stranger’s account , then disappeared.

Barbara and Robert Behan wanted to help their son and his young family finish their basement, so they sent the money as a Christmas present.

The transfer was sent from the couple’s TD bank account in Penetanguishene, Ont., on Dec. 21 to the Calgary branch of CIBC where their son has been the banker for decades. But the money was not showing up in his account.

A few weeks later, CIBC told the Behans family that the money had been lost — it had been deposited into someone else’s account the day it was sent — and the account holder had withdrawn all of it. $10,000 the next day and then closed the account.

“It’s unimaginable,” says Barbara. Obviously, this person has the same account number as our son. »

” But they [CIBC] The account number name never matched our son’s name. They put it in the wrong person’s account. Nobody checked. »

CIBC says customers can have identical account numbers. It’s another set of numbers – the five-digit transit numbers that identify a particular branch – that distinguish the accounts.

Some of the paperwork the Behans family had accumulated during the two months they tried to get their money back had piled up. (Keith Burgess/CBC)

According to banking expert Werner Antweiler, all of this could have been avoided if banks had a better system to ensure transfers ended up in the right place.

“It really refers to [issues] “With the current system,” said Antweiler, associate professor at the Sauder School of Business at the University of British Columbia.

“A simple mistake can escalate very quickly because once funds are left in the account it is not easy or impossible to retrieve them… so getting the correct transfer details is really necessary. »

After two months of battling the banks, the CIBC ombudsman decided the bank was not at fault but offered the couple half of their money as a show of goodwill.

The bank refunded the full amount after Go Public contacted them.

Watch | Transfer loss:

Couple lose $10,000 via wire transfer after bank deposits it into wrong account | Go in public

An Ontario couple claims a $10,000 wire transfer was deposited into the wrong account and then disappeared. The case highlights a major problem with Canada’s wire transfer system – the lack of built-in error detection. 2:10

Many sleepless nights

Until then, the Behans family say they have had “many sleepless nights” wondering if they will ever see their money again.

“I worried constantly. I said to all the bank managers and everyone we came into contact with, ‘If it was $10,000, would you be comfortable with that?’ “It’s ten grand, not $1.50,” Barbara said. The couple say they went back and forth between the two banks, without either of them taking responsibility.

TD told the couple the missing money was CIBC’s fault – because they put the money in someone else’s account after TD successfully transferred it.

The CIBC ombudsman reprimanded the Behans, telling them that instead of providing the transit number for their son’s Calgary branch, they had to give TD’s number 1 for Burlington, Ontario. He opened his account for the first time in decades.

“We encourage customers to double-check this information when sending payments to ensure funds are delivered to the intended recipient,” CIBC spokeswoman Trish Tervett wrote in an email to Go. Public.

The couple say any issues should have been reported and the money refunded.

“It shouldn’t have gotten to the point I’m at,” Barbara said.

TD told the couple the missing money was CIBC’s fault – because they put the money in someone else’s account after TD successfully transferred it. (Colin Hall/CBC)

error prone

Such errors are a direct result of Canada’s flawed wire transfer system, Antweiler says — a system called Lynx, which is error-prone despite launching last September.

“There are a large number of errors that occur when filling out forms [and] The slightest mistake can lead to these kinds of situations where people are out of pocket, often out of their own pocket.

The lynx is only used in Canada. It is owned and operated by the not-for-profit Payments Canada Corporation, which is regulated by organizations such as licensed banks and the Bank of Canada. It is responsible for almost all systems (including debits, checks and transfers – but not credit cards) used to make payments or send money.

More than 11 million transactions worth $126 trillion between financial institutions were processed in 2021, including international payments, according to Payments Canada.

Lynx doesn’t require banks to match the account number to the name of the account holder — and most banks don’t, Antwiler says — which increases the risk of mistakes like what happened to Behance.

CIBC denied it was fake, but eventually refunded Behans $10,000. (Colin Hall/CBC)

“We need to make it easier for Canadians to transfer money from one bank to another…a system that is not error-prone, where if certain characters get it wrong, the money ends up in the wrong place,” did he declare.

Lynx has replaced the Large Value Transfer System (LVTS) that has been around for more than 20 years, according to Payments Canada. He She Lynx calls “Another milestone in payments innovation. »

Antweiler says there is a solution, pointing to other countries using the IBAN system.

Unlike Lynx – which uses a three-digit bank code, five-digit access code and account number – IBAN uses a long alphanumeric code that allows built-in error detection to flag problems, leaving little room to human error.

This means that if there is an error, such as converting a missing number or a number, [the transfer] it is Antwerp.

As of January, 79 countries were using the IBAN system, including countries from the European Union, the Middle East, North Africa and the Caribbean.

Although it’s been around for less than a year, the Canadian wire transfer system called Lynx is flawed, according to banking expert Werner Antweiler. (University of British Columbia)

Go Public asked five major Canadian banks, Finance Canada and Payments Canada, for wire transfer error statistics, but never provided the information.

Al Behance says a safer and more reliable system is needed.

“We discovered during this period that our banking system and our banks do not talk to each other. They don’t work together. They do not have the same bank transfer models. They don’t communicate back and forth,” Robert said. .

“The thing we say is, how are you [the banks] Will you fix it in the future so it doesn’t happen to anyone else? »

Go Public Payments Canada asked about Lynx issues and whether it was considering switching to IBAN, but did not respond to questions.

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