We all know that when there is a bank error in their favor, you have a certain window of time to dispute the error and get it resolved. But what about errors in your favor? How long should you wait, before dismissing the liability?
I ordered a gift card from a popular national retailer. They shipped it to me, then then shipped it again. And since I had multiple orders in process at the time, I’d spent both before realizing one was a duplicate. I fully expected either an additional charge to my credit card or a “bill” in the mail, but 2.5 years later I’m still waiting.
I recently had fraud issues with a credit card. But after reporting it and getting the card reissued, a pending in-person store charge (that I confirmed multiple times was not included in the fraud report) literally disappeared. I’ve waited patiently for the charge to eventually post, or for the store to flip out over a large purchase being “disputed” (I even reached out to warn them of the possibility). But 2 months later and it’s still vanished.
One time, a now-defunct payment processor paid a bill twice. I have no clue if they sent it twice, or if the biller applied it twice. 3 years later, and I’m still waiting for the duplicate to be reversed.
In the days of green dot moneypaks, I had a load credited to a prepaid card twice. The duplicate was later reversed, but only after the card had been closed and the balance refunded. With a negative balance I kept waiting for them to come asking for the deficit, but 7 years later, still not a peep.
So how long do you wait before considering such errors to truly be “found money”? I fully intended to make good on each debt, thus I’ve continued to keep these funds available to cover any attempt to correct the mistakes. But how long is long enough?
We all know that if I were to proactively go to them with the money, it likely would not be booked in a way that resolves the initial error. So there’d still be the ongoing risk of them eventually fixing the error, and demanding the funds be paid back a second time. That’s the biggest reason I sit on such things; every time I try to ‘do the right thing’ proactively, it always ends up backfiring.
Moreso than an actual answer, I’m hoping this sparks an interesting discussion of various anecdotal stories about errors people have experienced over the years, and issues that have arose from the dead long after being forgotten.
Followup question: Are the proceeds taxable income? I’m assuming the answer is yes, but given the uncertain nature of the income (ie, I might have to pay it back), how do I proceed with paying the tax due?
I wondered that too. I’ve considered it to be a debt, but only because I knew I received more than I was supposed to. But there really isnt a debt. Each was completed as a single purchase transaction with no remainder due; no debt to be forgiven, no proceeds to be taxed. Buy-one-get-one-free deals and sale prices do not result in the free/discounted item being taxable income, and that’s essentially what I’ve received, even if inadvertantly. At most, I’d say the taxability falls in the same gray area as credit card cashback, due to the nature of what was purchased.
As I said, there were no funds to remove because I’d spent the cards before realizing they were duplicates of the same order (yes, had I realized it, I probably would’ve tried spending them anyways… ). I dont know for certain who was left holding the bag (the merchant they were purchased from, Blackhawk, the merchant they were spent at), but I most definitely still have the extra.
In which case, it’s also best to never register a gift card unless you have to. With no contact info, the card is mostly a dead end should there be an error.
I’m not sure, what happened to me fits in this site or not, but… A few months ago I noticed an add in Facebook.
It said FREE offer, just pay the postage, which amounted to $5-6. I have pain in my hip & this was a pain medication. CBD Zensation + Hemp Infused Lotion. 2 items & I paid the postage with my Citi DC card.
Shortly the items arrived in the mail. I looked them over & placed them away, never opened. A couple months later I was checking my credit card statement. There were 2 bills for $100 each= $200.
I called the number listed on the statement. The person on the line told me I would be mailed these 2 items monthly @ $100 each. I said “no way”, this was a free offer & I would be disputing the items on my credit card.
Then I hung up. A while later he called me back & said they would cancel the next months order & I would only be charged half price for these orders. I told him NO, it was a free offer & I hung up.
Evidently this company was known by Citi credit card. When I called to dispute the charge, Citi cancelled my card immediately & reissued a new card #.
A few days later the company did take the charge off my old card.
The FTC mail order rule may apply here (and possible state laws as well). Generally, and obviously don’t know the specifics of your transaction, if a company sends you something you did not agree to purchase (even mistakenly), you are under no obligation to return the item. The “seller” is not allowed to charge you for the duplicate, and if you do return the item the “seller” has to pay for shipping and arrange the pickup themselves.
Some others from the FWF days have experience with negative balance prepaid cards. Not sure if they’re still around, or if they’ll chime in, but if you did something to intentionally cause the negatives, it may be something to worry about. If not, it’s often just a write-off.
Theoretically, it could be taxable income. With respect to the duplicate item, the FTC considers the duplicate to be a gift. As we all know, gifts are not taxable income. Not sure whether the IRS would agree with the FTC’s characterization for tax purposes, but if they did that item would likely not be taxable income.
Gross income is a very broad category though. So a lot of these things could be taxable income if there’s no applicable exception.
Although realization / timing of that could be an issue. Part of the whole point of OP is that he has no gain, yet, since there’s an offsetting debt liabilities on his books. Once that debt is no longer collectible, presumably the gain would be realized, but given how banks can in practice claw back money whenever they want, it would be difficult to know when that time has passed. Meanwhile, you have no tax reporting obligations and cross your fingers.
I do recall there being a default time on recognition of COD income, but that was a while ago that I learned about it, and haven’t revisited it at all so don’t remember the specifics of the rule or the recognition date, and this was also all pre-TCJA so no idea if it’s changed since.
Earlier I ordered a couple summer shirts along with other items. The other items arrived in regular time. But the shirts didn’t. I inquired about the order & shortly the shirts arrived. A few days later I received a second package, repeat order of shirts.
Long story short!! I waited some time thinking I would hear from the company but narry a word.
Very unlikely to be the case with a company like GD, a bank, etc., but YMMV on contacting retailers. I get mistaken orders a lot. A couple months ago I ordered from a clothing retailer (online only, with the millennial vibe) and they sent me what I ordered. About a week later, they sent me the same item (a duplicate that I didn’t order), just in a different size. I emailed them to tell them about it, and they thanked me for informing them, told me to do what I wish with the incorrect size items and they sent me another order of the correct size (they were fully aware I had already received the correct order).
But if it’s something like a bank or a massive retailer, I would not contact them about it because of, as you say, the risk of your good deed going punished and seeing multiple charges pop up, etc.
Back in the day, I had a merchant account set up to accept tips. I tried processing a charge to a prepaid card, then added a tip that exceeded the balance of the card. It processed fine. Then about 3 weeks later the merchant account got a chargeback for the difference. Didnt seem right that they’d do that to the merchant, but I had no inclination to explore that scenario further.
Ideally that’d be what happens, but in this case at best it’d be a gray area. Even letting me keep the card stock they mailed, after receipt I had to manually activate them for them to have any value. So I took the value as much as they sent it to me. If I refused to pay (had they ever asked), I honestly dont know where it would’ve gone.
I’d imagine how long depends quite a bit on the specific bank error in your favor. In case of gift cards, it’s a mixed bag because it’s both money and a tangible good item.
For tangible goods, I’m pretty sure you are not required to send back additional items. If you try on Amazon to return an order where you’ve received extra, they tell you to forget about it. Last month, I ordered two undershirts and received 3 in my package. The packing slip showed 2 but an overworked assistant must have grabbed one too many. I went to online help to return the extra shirt and Amazon told me they didn’t want me to, probably because the return shipping and restocking labor cost would likely be about the same as the cost of the shirt.
Now would a physical gift card be considered the same? I don’t know. Last year, I ordered a lot of Amazon gift cards to max out cashback during Q4. I received one extra that I had not ordered but the gift card was actually not activated so no harm done. Had it been activated, they could have simply revoked the validity of the card upon me contacting them. But if I had spent the money on it, I imagine the process would be more cumbersome. If I used it in good faith not realizing the error, am I liable for the debt related to an item I did not order? I’m not sure. It’s not quite the same as a money transfer or charge that gets erroneously cancelled.
As far as how long, I imagine it also depends on the origin of the error. If it is a bank or retailer, it may be different. But my guess is that past the close of their fiscal year, if they did not keep a record of the discrepancy already and initiated an investigation, it’s likely gonna get shoved into operational misc. losses. Otherwise, I don’t see what circumstances (other than initiated by you) would make them revisit that issue in future fiscal years. Maybe an IRS audit but unless the error is so significant that they’d need to find justification, even that may not be enough to get them to take a second look years later.
Here is the situation I had … My state and the surrounding states have different rules on how sales tax is paid on vehicles. I purchased a new vehicle in a state with different rules. The confusion that created ended up with me not having to pay sales tax on the new vehicle.
My state: All sales tax, titling and registration fees are due with the sale of the vehicle. Even if you live out of state, sales tax based on their rates is still collected. If you are out of state, when you go to register your vehicle in your home state, you can show your receipt and they request the sales tax money be sent to them ( your home state ). Note: many people like this system as you can roll sales tax into the loan vs. having to pay separately.
State of my purchase: No taxes are collected at the sale. You have 30 days to license your vehicle at which time sales tax etc. must be paid as well. They provide estimates of the amount you owe for taxes, but nothing is collected.
So I drive back to my home state fully expecting to pay sales tax when I register the vehicle and get plates. The DMV was certain they were going to request sales tax reimbursement from the state of purchase and didn’t want to collect from me. I tried once to tell them I thought they were incorrect, but gave up as no one at the DMV is ever wrong. 5 years of going back to renew registration and never a word about unpaid sales tax ( 7% on a 40k vehicle ).