> Ordinarily, the law would be on Citibank's side here. Under New York law, someone who sends out an erroneous wire transfer—for example, sending a payment to the wrong account—is entitled to get the money back. But the law makes an exception when a debtor accidentally wires money to a creditor. In that case, if the creditor doesn't have prior knowledge the payment was a mistake, it's free to treat it as a repayment of the loan. Judge Furman ruled that that principle applies here, even though Citibank notified its creditors of the mistake the very next day.
Key point 'wrong account' is not 'right account but for the wrong reason'.
The article most likely written by a non business person confuses a mistake (money sent to the wrong account) with money sent to the right account. The law almost certainly doesn't allow a wire transfer sent to be recovered for that reason and type of mistake. Importantly though it does (by design) allow a transfer sent to a mistake (like a typo) to be recovered. This actually makes sense and here is why:
A wire transfer is payment for 'goods or services' let's say. Often that 'goods or services' is released (or relied upon) when money is received. In the sense that it is not reversable under any and all circumstances. A wrong account is 'going to the wrong place'. The right account is the right place.
Wire transfers are by design 'final'. ACH is not. An ACH can be reversed (for a number of reasons).
If you could claw back wire transfers all sorts of things (that depend on them being final) would break down and you'd have many problems down the transaction line.
Key point 'wrong account' is not 'right account but for the wrong reason'.
The article most likely written by a non business person confuses a mistake (money sent to the wrong account) with money sent to the right account. The law almost certainly doesn't allow a wire transfer sent to be recovered for that reason and type of mistake. Importantly though it does (by design) allow a transfer sent to a mistake (like a typo) to be recovered. This actually makes sense and here is why:
A wire transfer is payment for 'goods or services' let's say. Often that 'goods or services' is released (or relied upon) when money is received. In the sense that it is not reversable under any and all circumstances. A wrong account is 'going to the wrong place'. The right account is the right place.
Wire transfers are by design 'final'. ACH is not. An ACH can be reversed (for a number of reasons).
If you could claw back wire transfers all sorts of things (that depend on them being final) would break down and you'd have many problems down the transaction line.