Insights for consumers
When you send money overseas, always double-check the account details before confirming the payment. It is also essential to check other details to ensure a successful transfer. This can include specific codes that must be entered to send the money to the correct location and bank. These details can vary depending on the country the money is going to.
If something goes wrong, tell your money transfer service immediately. They will try to help recover the money, but they cannot guarantee it will be returned to you. Ask the money transfer service what steps they are going to take. If you are feeling overwhelmed or unsure, ask for clearer explanations or more support, especially if you are vulnerable or unfamiliar with the process.
Insights for money transfer services
Respond quickly when a customer raises a payment error. Ensure your communication is clear, particularly when working with vulnerable consumers. If you need them to provide more information to help you recover the money, consider whether you are requesting information that the consumer can realistically provide.
Raymond’s international money transfer to his son doesn’t arrive
Raymond*, aged in his nineties, transferred US$12,000 (almost NZ$20,000) from his account with an international money transfer service to his son’s overseas bank account. Two days after making the payment, the money had not arrived.
Raymond realised he had accidentally entered the wrong routing number for the payment, using the number for the money transfer service’s intermediary bank instead of his son’s bank. A routing number is used for international transfers in some countries to confirm which bank the payment should go to. Raymond used the correct account number, but the incorrect routing number meant that the funds were sent to a completely different bank.
Raymond notified the money transfer service of this error, asking if they could correct it and send the funds to his son’s account instead.
How the money transfer service responded
The money transfer service asked Raymond for a ‘recipient bank statement’, which he and his son could not provide because they were not customers of the overseas bank that received the funds.
It was not until 10 working days after Raymond reported the error that the money transfer service attempted to recall the funds. The service explained that this timeframe gives an opportunity for money sent to incorrect account details to bounce back and be returned to them automatically before initiating a recall.
The bank doesn’t reply to the request to recall funds
The overseas recipient bank did not respond to the recall request. After another month, the money transfer service suggested that Raymond or his son contact the overseas recipient bank again.
Contacting the overseas bank leads nowhere for Raymond
Raymond’s son repeatedly tried to contact the overseas recipient bank but was told they would only provide information about Raymond’s transfer to the money transfer service.
Raymond becomes increasingly worried about the missing money
Raymond felt that the money transfer service’s communication was unclear, and that he was repeatedly being asked to do things that were not possible for him to do, such as getting information from the overseas recipient bank.
The money transfer service tries again to recall the money
The money transfer service made a second attempt to recall the money, but the overseas recipient bank did not respond.
Raymond complains to FSCL
Feeling distressed and unsure what else he could do, Raymond complained to FSCL.
How did FSCL review the complaint?
We reviewed the money transfer service’s terms and conditions. These clearly stated that customers must provide correct payment details. If incorrect details are provided, the money transfer service is not responsible for money sent to the wrong recipient, and is only required to make reasonable efforts to recover the funds.
Did the money transfer service do enough?
We agreed with Raymond that the money transfer service should have tried to recall the funds before the 10 working days, knowing that Raymond was vulnerable and that the funds had been sent to the wrong overseas recipient bank. We also considered that communication could have been clearer, and that asking Raymond to obtain information from a large overseas bank was not realistic.
The money transfer service could have been more helpful, but we found that they took reasonable steps to recover the funds. The lack of response from the overseas recipient bank was not within their control.
What was the outcome of the case?
We issued a final decision recommending that the money transfer service pay Raymond $1,000 for non‑financial loss. This recognised the stress caused by poor communication, the delay in initiating the recall, and the pressure placed on Raymond to take steps he could not realistically complete. We did not consider that it would be fair to require the money transfer service to reimburse Raymond for the funds lost, as their terms and conditions were clear, and they had taken reasonable steps to recall the funds.
