Insights for consumers
Any money deposited into your money transfer account may automatically pay for pending payments, so always check if you have any pending transactions, and check the account details carefully before sending money. If something looks unfamiliar, stop and contact the money transfer service before proceeding.
Alex made two deposits, but only one appeared in his account
Alex* was going on holiday, so he paid $1,500 into his account to load onto his travel card. When the funds had not arrived a few days later, Alex sent another $1,500, which appeared in his account that evening.
What happened to the first payment?
The first payment did not arrive as expected. Instead, it was used to pay a transaction Alex had unintentionally set up to someone he did not know. The recipient’s name included initials similar to that of a bank, which Alex assumed meant someone at the bank was processing the payment. Believing the funds were going to his own account, Alex had approved the transfer.
Alex alerts the money transfer service of the error
When Alex realised the money had gone to an unknown person, he contacted the money transfer service. Alex explained that he had never added this person as a recipient and had no way to contact him.
When deposits are allocated to pending payments
The money transfer service explained that Alex had created a future payment, but never paid for or cancelled it. When the first $1,500 arrived, the system automatically allocated the funds to the pending transaction. The second payment was credited to Alex’s account because there were no other pending transactions. The money transfer service said it was Alex’s responsibility to cancel transactions he did not want to complete.
Alex disagreed, saying he never knowingly set up the payment and did not know the recipient. He complained to Financial Services Complaints Ltd (FSCL).
FSCL reviews the complaint
We reviewed the information and agreed with the money transfer service that the issue occurred because Alex unintentionally set up and approved the transaction. The service’s terms and conditions make customers responsible for ensuring transaction details are correct, and for cancelling transactions they do not wish to complete. Because Alex entered and confirmed the details, the service was not responsible for the loss.
How did FSCL suggest that the complaint should be resolved?
We asked the money transfer service whether they would be willing to settle the complaint on a goodwill basis. We said it seemed to be a genuine mistake on Alex’s part, and the correspondence showed that it had caused him significant distress.
As a goodwill gesture, the money transfer service offered to refund 50% of the loss ($750). We considered this a fair and reasonable resolution because the service did not cause the error, and their terms were clear.
Alex accepted the offer, and the complaint was resolved.
