Whoops: Typo Causes You To Overdraft $546,020

Reader Thomas was celebrating the birthday of his 1 year old when a letter arrived from his credit union. It was a notice informing him that he had overdrafted his account. By $546,020. Whoops.

Thomas says:

I was getting ready to sit down for a birthday celebration for my 1 year old when I ran to the mailbox to see if she had received any new birthday cards. To my surprise I see a letter from my credit union with “URGENT” stamped on it in big red letters. “Oh No!” I think, not an overdraft notice, I was on top of my game and didn’t think I was in the trouble. Well boy was I wrong.

I open this letter and it says that I have a $546,020.00 NSF. YIKES!!!!

How can this be? I have an overdraft for half a million and all I get is a letter? No phone call, no personal attention??? What the… it says that I made a transaction to Banks of America for that amount? The darn card has only a $5,000.00 limit on it…

So thinking though the whole thing trying to figure out what happened… Here’s the deal. I went online to pay for my work corporate credit card. I had a $546.02 balance. Apparently I added a few extra zeros to the amount and quickly hit enter. Bam I had just transferred a half a mill to my corporate credit card. WOW. Seems odd that there is no check and balance system and that a credit card with a $546.02 balance can post a payment of over 1000 timers that amount. That just seems crazy.

Well the next day I have quite a conversation with the CFO of my local credit union. She was very sheepish over the whole thing. Apologized up and down for what had happened. My one big question to her was this…”At what level of an overdraft does the system kick this out and I get a phone call and not just a letter??”

She had no answer for me other then she would speak to the person working the overdraft area and make sure they are on the look out for this in the future. Not very comforting, but it is what it is. The big question was what Bank of America would say.

A few days later I did hear from someone at BOA. I heard from a Senior VP over corporate affairs and she said in her 30 years of banking experience, she has never seen anything like this. “I bet not I said!!” I asked how this could happen. In this day and age -with bank transparency at an all time high, why didn’t this get flagged? Isn’t there a system to see that a $5,000.00 credit limit card with a $546.02 balance doesn’t need a $500,000.00 payment?

She told me that their processing systems are over 20 years old and there is nothing like this for checks and balances built into the system…alarming really.

Isn’t it comforting to know that none our financial systems can catch a “butter fingers” like this? Makes you think, what else they don’t catch.

Clearly, Bank of America gave this transaction the same sort of rigorous inspection as most mortgage applications. Yes, that was a cheap joke.

We’re happy that despite the whole $500,000 overdraft issue, everything worked out in the end. Your story reminds us of a similar incident at a Burger King in which a register typo drained over $8k from a woman’s account and left her without any money for 5 days.

It seems odd, but it does happen.

Comments

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  1. nucwin83 says:

    Does BofA not have a “verify your payment” page? Every bill I’ve ever paid online has a second page that lists the details of the transaction.

    Kudos on them fixing it, and yes there should be something that spit it out, but in the end… the fault was with the consumer. This wasn’t anything the CU or BofA should have apologized for unless there really isn’t a second screen detailing the payment you’re about to make.

    • speedwell (propagandist and secular snarkist) says:

      @nucwin83: No. It isn’t the customer’s fault. It’s BASIC knowledge of everyone who works in IT that you must set up the system so this sort of thing can’t happen. For the same common-sense reason, we have our database set up so nobody can delete more than five records in the system without an administrative override.

      • calquist says:

        @speedwell, avatar of snark: Wouldn’t those confirmation pages be the kinda of thing that IT would be in place to prevent this?

      • Kogenta says:

        @speedwell, avatar of snark: I dunno about that. Seems like what’s basic knowledge in the IT world today wasn’t even on the radar 20 years ago.

        Have to admit though, even if their backend is from 20 years ago and lacks the checks for this type of problem (and lets face it, Banks, Telephone companies and the Government all use backends that are ancient), their front end web site better be “modern” and should definatly have incorperated these checks.

    • legwork says:

      @nucwin83: Criminy, fail. You’ve just been fired from your Onlinelegacy gateway coding job, for incompetence.

      Just about all code needs boundary checks beyond “OK?”, especially code dealing with human fingers & eyes. This is middle-school level training.

      • JRB says:

        @nucwin83: It depends what kind of world you want to live in. Was it the consumers’ fault? Yes. But ultimately, everything about our world is set up to be understanding of honest human errors. As to whether or not the system should solve the problem automatically, that’s up for debate. But at the same time, the should just resolve the issue and waive any fees it incurred. Being human happens.

    • Xkeeper says:

      @nucwin83: Please; even the ancient terminals we had back in middleschool for working the breakfast lines would pop up a dialog box with “Big payment — are you sure? Y/N” if you put in a payment over $20 or so (considering breakfasts were like $1~2 each)

      Sanity chceks like this are a basic requirement of software just because errors like this are extremely frequent.

  2. SillyinPhilly says:

    When I worked at Bank One we had flags in the system for potential money laundering that would have flagged this immediately. Under Reg Z, credit balances have to be refunded to the cardholder. If Thomas were the disreputable type he could do this for evil purposes that banks are required by law to guard against.

  3. Stile4aly says:

    This is why Reg E exists. Although a user error, you’re not at fault for a situation where the wrong amount posts. I assume the transaction was rejected rather than actually posted to your account, so the only issue is to get the related OD fees back, but if it were a less dramatic case (say being charged $50 for a $5 hamburger) then a claim would take care of the issue in short order.

  4. twophrasebark says:

    I once had $10 deposited into my account 10,000 times by some computer glitch.

    Yes, I notified the bank but I still got a bank statement the next month that was as thick as a phonebook.

  5. calquist says:

    Um, he was the one to make the mistake. The credit union didn’t notice the mistake just like he didn’t when he probably went through at least one or two confirmation pages.

  6. philmin says:

    Sort of a general response to this – but nothing annoys me more when a company doesn’t call you even when there is a major issue. It’s always a letter a week after the fact.

    • pop top says:

      @philmin: I had a credit card through Chase that they closed because of unauthorized activity (someone in another state tried to buy $400 worth of database storage for their website). They didn’t inform me until I called over a month after the fact to make a payment and switch to paper mailings.

      It was like, “Oh by the way, someone probably stole your credit card information and we closed your account but didn’t tell you or bother to open a new one until just now. Good thing you didn’t use that card between now and then, right?”

      • tbax929 says:

        @squinko:

        My creidt union did something similar to me. They cancelled my debit card without telling me due to suspicious activity. I only found out after a rather embarassing card denial.

  7. mcjake says:

    I just think it’s awesome that they only charged you a $28 fee.

  8. parad0x360 says:

    Banks…One time $600 was put into my account and I had no idea why. I knew it wasnt mine so I stopped using the account and notified the bank. They said oh thanks we will fix it. Couple weeks go by and the money is still there. I called them again and got the same will fix it speech.

    Over the course of 4 months I called them about once a week and told them the $600 wasnt mine. They never fixed it. Fast forward to 9 full months of an extra $600..

    I guess like a fool I spent $20 of that $600. The very next day they pulled the $600 from my account and slammed me with overdraft fee’s. I believe there were 6 or 7 but this was a couple years ago so I might be off. Either way they would not refund the fee’s and said I shouldnt have spent money that wasnt mine…which made my blood boil. I have since switched banks.

    The point is Banks are stupid and evil.

  9. Nakko says:

    I went to eat at a Whataburger, and my meal should have cost $17.11, but instead some butterfingery by the clerk at the counter tallied it up to $171.11 on my debit card. Not quite the same, but, still.

    • ajlei says:

      @Nakko: I’m always leery when I go places where they have to manually punch in the total into the credit/debit machine. I’ve heard far too many mis-punch stories to really trust any, as you say, butterfingery people.

    • jc364 says:

      @Nakko: You really have to watch out for clerks that are in a hurry. Some clerks have a bad habit of thinking that they HAVE to process each transaction as fast as possible, and even brag about how fast they are. Unfortunately, mistakes caused by rushing through transactions hurt businesses and consumers alike.

  10. donopolis says:

    The point of the post is not who is at fault for the transaction in the first place. The customer clearly states he made the original mistake.( you can stop blaming him now)

    The point is that neither monetary agency saw fit to question what was clearly a mistake. Why would a Half a million dollar overdraft go through without a hitch? I can’t deposit a chick for 200.00 without a three day hold and phone calls.

    Don

  11. Its_Miller_Time says:

    What is not clear here is if the user paid the bill via BoA’s website or through the Credit Union’s bill pay service.

    If it was through BoA (which is probably wasn’t), it it built in tha the maximum you’re allowed to pay is the total outstanding balance. It will never let you pay more than that. Same goes for American Express.

    Now, if the End User paid using the CU’s online bill payment service, then the comment about checks and balances in IT seems to be pointless – as the CU has no idea what the balance is on the BoA corporate card, so putting in “limits” there would be redundant.

    • tommytrc says:

      @Its_Miller_Time: I used the BOA website.

    • Necroscope says:

      @Its_Miller_Time: “Now, if the End User paid using the CU’s online bill payment service, then the comment about checks and balances in IT seems to be pointless – as the CU has no idea what the balance is on the BoA corporate card, so putting in “limits” there would be redundant”

      I am not sure you understnad the meaning of the word redundant. But, the credit union could limit you to not using their bill payment service to spend more than you actually have, you know in the account.

  12. XTC46 says:

    None of my credit cards will even let me over pay by 10% let alone 1000%. Any over payment becomes a liability for the bank, so they typically do not allow it. You said this is for a business card, so maybe it has differnt checks and rules in place.

    Im shocked that your crdit union let you overdraft that much as it would be bad business had you actually took them for 500k, but other than that, this is the OPs fault for rushing through things and not reading the verification or confirmation pages.

  13. tedyc03 says:

    While this is embarrassing and ridiculous it’s not unheard of.

    A half a million dollars isn’t a whole lot of money, in bank terms. Sure, most people don’t carry those kinds of balances in their accounts, but hey, a $500,000 transfer (when you do $3B in an hour of money moving in and out) is no big deal. And as my mother, the accountant, says, “after a while they’re just numbers.”

    Should the computer have flagged this? Sure, more than likely. These systems are old, though. Why are they so old? Because replacing corporate software is extremely expensive, time-consuming, and difficult. If Bank of America has 10,000 offices (conservative figure) worldwide that use the core banking system, replacing it means replacing software on every computer in every single office. It’s easier to keep using the same software than try and convert. Especially if you’re a bank – you lose one person’s account and you end up on Consumerist.

    I think this is more a testament of the poor state our banking system is in. These are people who still take the weekend off, don’t post activities done after 3 pm (how many of us would get away with not doing work given to us after 3 pm in any given day?), and have massive amounts of mission-critical information in systems older than Windows. That should be the upshot of this story, and it should scare the **** out of us.

    • NotATool says:

      @tedyc03: I call BS on the “old system” excuse. Computers even from 40 years ago had the concept of comparison operators (less than, greater than). They could have easily programmed in a safety check, but failed to do so. It was the bank’s failure to conceive of a safeguard, not the fact that the “system was old.”

      Also, banks do system conversions all the time. This would probably be an upgrade of a back end system which wouldn’t require software to be pushed out to 10,000 desktops. Even if it did require 10,000 desktop pushes, no big deal. They do that all the time too.

      • tedyc03 says:

        @NotATool: I assure you, as someone who works in information technology and writes software, you have no idea what you’re talking about. Pushing an antivirus patch to 10,000 computers is a lot different than pushing a new system. And as for comparison operators, the design of the application would determine whether or not comparison operators are in place. There may be a very legitimate reason why this is a big fail, including stupidity on the part of the developers or accrued technical debt.

  14. kiltman says:

    Yeah, last year I accidentally paid off my student loans instead of the monthly payment. 17k instead of 125. Oops!

  15. bohemian says:

    I tried to take $6000 out of my bank in cash to buy a used car and you would have thought I was robbing the place. They were whining about federal forms and such.

    BOA accidentally takes half a mil out of someone’s accounts over an input error and nobody raises an eyebrow.

    This does not make me have any confidence in banks.

  16. Eddie Falkenburg says:

    I really question the truth to this story. I’m a former employee of a bank (Fifth Third Bank). There is no way in hell we or the computers would allow an account to overdraw that much. In fact we have a limit (as all banks do) that can be withdrawn electronically from an account.

    On top of that, every account has a SET amount that will be covered by overdraft (again as all banks do) otherwise the bill is just not paid with NSF. The HIGHEST I have ever seen this amount set to is 5,000.

    Unless credit unions are really in the dark age.. I take this story with a grain of salt.

  17. MBEmom says:

    This kind of crap just makes me want to pay cash for everything. Then some stupid and clearly obvious error can’t overdraw my account half a million dollars.

  18. jknode says:

    It’s not THAT unusual. It’s happened to me, where my citibank student loan deducted $10,000 (that wasn’t there) from my citibank checking account and all they could tell me when I asked who authorized it was that I had, by agreeing to an electronic transfer. It took me months to get my money back and in the meantime had to drain my savings account and pay all of my bills in cash, in person. It was horrible.

  19. TWinter says:

    @bohemian $6,000 in cash would be perfect for a mid-level drug deal and the government takes that stuff seriously.

    Much of what’s wrong with America today is the result of misplaced priorities. White collar crime and consumer protection are generally ignored while disproportionate resources have been devoted to deal with problems that are relatively small or sometimes non-existent.

    • ionerox says:

      @TWinter: $6k is nothing to the Feds. Banks aren’t required to report on cash transactions under $10k unless the bank is suspicious about the transaction (if the customer appears to be structuring withdrawals/deposits so they don’t hit reporting limits). Even then, they are strictly forbidden to tell the customer about any reporting they might be doing on the transaction.

      So BOA was bitching about federal forms when (a) they didn’t need to file anything for a paltry $6k and (b) they shouldn’t be talking about it to the customer anyway.

  20. philmin says:

    Bank of America online does not allow you to transfer more from your checking or savings account than you have in it, I can’t imagine why any online banking would ever allow you to do this.

    If this credit union lets you either A) pay more than the balance of the card or B) transfer more than you have in your account, then I can only see it as a situation where they are actively looking to create more situations where they can charge overdrafts. It is just pure incompetence.

  21. TEW says:

    It is amazing that he got to talk with the CFO. @bohemian The bankers don’t know what they were talking about; the feds allow you to take under 10 grand anywhere without needing to declare it.

  22. aja175 says:

    wow, their fraud department is badly in need of some new toys. Our system would have kicked this out and generated a phone call.

  23. Jeff Newman says:

    How absurd. Wasn’t there also an article on here a few weeks ago where a utility company had an autopay error and overdrafted an account by millions?

    This is starting to sound like the easiest way to rob a bank ever.

  24. econobiker says:

    ” ionerox 3:34 PM @TWinter: $6k is nothing to the Feds. Banks aren’t required to report on cash transactions under $10k unless the bank is suspicious about the transaction (if the customer appears to be structuring withdrawals/deposits so they don’t hit reporting limits). Even then, they are strictly forbidden to tell the customer about any reporting they might be doing on the transaction.”

    The US Post Office reports on money orders totaling $3000 or more purchased by the same person so I guess $5000 is probably the bank limit due to “smurfing” – multiple under $10k deposits/withdrawls that combine to equal over the $10k limit.

  25. failurate says:

    The bill paying/check writing service offered by her credit union is probably managed/owned by a different company. They would have no idea how much money was in her account. There should probably be more authorization type checks and maybe a bill paying limit set for each account.

  26. emis says:

    Isn’t it comforting to know that none our financial systems can catch a “butter fingers” like this? Makes you think, what else they don’t catch.

    I guess the way to catch this is to prevent average morons from accidentally typing “546020” instead of “546.02” … aren’t you paying attention to what you do online? Do you not care if you accurately pay your bills or not? Did you double check your activity?

    What else have you “butter fingered” and then gone online to complain about the that someone else didn’t catch your mistake and flag you about?

    Take some responsibility for your own mistake instead of talking about how sheepish the CFO your bank was, you should be the one apologizing.

    You sound like the type that would sue after burning yourself with coffee…

    • Anonymously says:

      @emis: We’re so very glad you’re perfect, but people make mistakes all of the time (such as blaming the poster). I accidentally paid 10X the amount on my student loans than I expected to once; It’s easy to do.

  27. Ed Chan says:

    He didn’t overdraft, if you read the fine print, it was a returned payment NSF. Not a big deal in the end, the $500k didn’t change hands.

  28. Farquar says:

    I did this exact same thing paying an MBNA card through a BOA account. My payment was $200ish and change.. Instead of hitting 200.00 I typed 200,00 (Which is probably what the OP actually did.) 200,00 defaults to 20000.00. Yeah, 20 grand. And no, it wasn’t caught by anyone, and yes, for about 3 days I had a 20,000 credit on my credit card. When the 20,000 payment to the card was rejected the cc charged me for not paying on time.

  29. jeandelli says:

    omg, this same thing happened to me a couple of months ago when I made a typo and overpayed my bank of America credit card for $50,000, instead of $500.00 which was all that was due on the card. It over drew my checking account and I had to jumb through hoops to get it corrected.

  30. Android8675 says:

    That was a huge conversations in one of my old comp sci database courses. What it basically comes down too is it’s cheaper to maintain older systems, and usually the cost associated with updating them out weighs the long term gains.

    In other words if it’s not broke why fix it? Or if your car has windows that go up and down, do you really need power windows? Yeah it’s nice, but you can get by without it, and it costs less.

    Bottom line, oops you made a mistake, the bank corrected it with apologies. Sounds like life goes on.

  31. Dethzilla says:

    I’m betting it was the letter in question that led to BoA sending loot to nigerian scammers…

    I know… different scenario but a 20 year old system… why tell anyone that. Major Security Breach. Move your money now!

  32. Skaperen says:

    Something like this on this scale happened to my father, once, around 30 years ago. One of those magnetic characters got printed on a check in a slightly shifted position, and a “0” got read as a “6” by the machine. It was a check he deposited, so his account now had $600,000.00 more added to it. But it did get flagged and went to audit, which found the error and corrected it. This was in the 1970’s when computers were properly coded to check for things going out of bounds. Now days, that’s done “off shore” with no sanity logic at all.

  33. econobiker says:

    I input the wrong amount into an ATM once for a deposit amount of $1200.00 versus $120.00. I actually used the “Send message to bank.” feature to scrible a note about it when I realized my mistake. That effectively flagged the bank since they later said that no one uses that feature ever in a blue moon…

  34. Zelle999 says:

    It was a funny. You know, cause he overdrafted a huuuge sum and the fee was very small…er, nevermind.

  35. AdvocatesDevil says:

    Um, I’m usually the first person to say, “Stop blaming the OP”, but how is it the bank’s fault this guy did something as stupid as this? Also, what does the whole “it was my kid’s birthday” have to do with the email? This is one of the rare times I have to say, “You were an idiot and that’s no one’s fault but your own!”

  36. avantartist says:

    Maybe I can get back the $700 overpayment I sent Bank of America because of a flaw in citibanks online billpay.

  37. Anonymous says:

    Amazingly a similar thing happened to me the other day! I was transfering funds from my checking to savings with Chase online. I accidently transfered what my future savings balance would be and received an error. Realizing my mistake I tried the transfer again and received another error. Next thing I know all my balances were almost 0! My checking balance was being transfered to savings, and my savings was being transfered to my checking because of overdraft protection. Interestingly this happened despite the errors I received, and without me ever “confirming” the transfer.

  38. cordeduroi says:

    Geez, if I ever plan on skipping the country, I’m going to “accidently” transfer half a mil into a Swiss bank account minutes before I get on the plane.

  39. Anonymous says:

    there’s a difference between overdraft and non-sufficient funds fee.

    the account isn’t overdraft (as the article later mid-way changes the situation that happened). the account was just presented with a $546,020.00 item that *wasn’t paid*… thus returned with an NSF fee of $25.00.

  40. jswilson64 says:

    At least the overdraft fee was still only $25.00 …

  41. flyromeo3 says:

    why call the bank and “bitch” Next time before clicking on submit or enter make sure the payment your applying is correct. A simple 1 or 2 seconds of human intervention goes a long way.

    fken whiney baby.

  42. Verucalise (Est.February2008) says:

    The statement, dated 5/6/08.

    And we’re just hearing about it NOW!?!??

  43. the Goat says:

    This is 100% the original poster’s fault. Bank of America and his credit union are not at fault at all.

  44. joellevand says:

    @parad0x360

    Before you call someone stupid, you should look at your own writing. Apostrophes are not used to denote plurality.