A mishap on Christmas morning might have had folks in the UK believing Santa Claus now do bank transfers instead of risking injury by scrambling down the chimney. However, Santander bank in the UK is now restoring them back to reality by correcting the error.
The UK bank had mistakenly credited its customers more than necessary. It meant some people got double their wages or bonuses. The total amount deposited was £130 million.
For customers that may have spent the money, Santander now wants its funds back.
The bank claimed a mysterious error was responsible for getting people’s hopes up, causing some payments to be repeated. More than 2,000 businesses had their transactions doubled. On the receiving end were about 75,000 business and individual accounts. Meanwhile, the extra payment did not affect the originators of the transactions as they came from Santander’s own reserves. This means the bank is in the hole for the whole over-payment.
“We’re sorry that due to a technical issue, some payments from our corporate clients were incorrectly duplicated on the recipients’ accounts,” Santander said. “None of our clients were at any point left out of pocket as a result, and we will be working hard with many banks across the UK to recover the duplicated transactions over the coming days.”
Santander’s effort to recover the funds is complicated by the fact that many of the recipients had accounts in other banks, like Barclays and HSBC. Fortunately, there is a recovery process known as ‘bank error recovery’, which can help Santander track and request the money.
Just how Santander will recover the money from recipients that have spent it is yet to be seen. But it is certainly a disaster that the bank has to deal with.
Santander UK is the British subsidiary of Spanish Banco Santander, with more than 14.4 million customers. It reported a profit of £687 million on its operation in the UK in the third quarter of 2021.
In another technical mishap, Santander customers were unable to access banking services for several hours, prompting an official apology from the bank.
While relatively rare, Santander isn’t the first bank to mistakenly over-credit its customers, although it might have a record in the number of accounts affected. In the UK, two siblings in England went to jail after spending almost £135,000 deposited in their account by a bank in error.
In the US, a woman in Louisiana ended up with fraud charges after failing to return $1.2 million mistakenly deposited into her account by Charles Schwab. She was to have been paid a far modest $82.56, but that did not stop her from splurging on a house and an SUV with the mistaken funds. It cost her her 911 dispatching job.
Still in Louisiana, another customer became a billionaire temporarily when his account was credited with $50 billion. His net worth dropped drastically when the issuing bank, Chase Bank, returned the account to its correct balance.
Usually, in cases of accident account credits, the funds are returned after the recipient has enjoyed a moment of fame, depending on the amount involved. However, at least some recipients have successfully held on to such funds. The case involved Citibank and $900 million wired to several hedge funds that were creditors to cosmetic company Revlon. Some of the recipients refused to return the money, about $500 million, and a court sided with them, citing some of Citibank’s terms and conditions. It is not likely that Santander customers can legally retain the extra money.