What to do when ATMs give the wrong money

We explain your rights if an ATM gives you too much or too little cash.

One night in the late 1990s, I was partying in central London, near Piccadilly Circus.

Running short of money, I set off to find the nearest ATM (Automated Teller Machine, or cash dispenser) to withdraw some cash.

Heading towards Shaftesbury Avenue, I saw a huge queue for one ATM machine, but no-one was using the neighbouring 'hole in the wall'. Assuming that the second machine was broken, I asked one queuing man if it was out of order. He replied: "It's working, but this one pays out twenties for tenners!"

Hence the reason for the weirdly long queue: these folks wanted to 'double their money' by getting £20 notes for each £10 note requested. Being an honest chap in a hurry, I didn't hang about; I simply used the idle machine and walked off.

[Related story: Police called as ATM dispenses 'free money']

'Free' money?

This week, customers took similar advantage of a Lloyds cash machine in Ipswich.

The ATM malfunction meant people were getting double their money, word spread and police had to be called.

"My friend asked for £40 and the machine gave out £80," Emma Hutchinson, from Ipswich, told the Ipswich Star.

You stole your own cash!

Banks take a dim view of customers who pillage their accounts by withdrawing money they don't have.

Frankly, doing this is just shooting yourself in the foot, because banks have a record of every transaction from every ATM.

Using this information, banks can and do track down every unauthorised withdrawal and demand immediate repayment. In the meantime, you'll be hit by sky-high charges for creating an unapproved overdraft. Thus, the banks eventually get their own back on cash-machine bandits!

What about overpayments?

What about when you key in a £20 withdrawal and, instead of two £10 notes, you get two £20 notes?

Of course, it's easy to see how this happens. Some harassed bank manager — perhaps at the end of a long day — has accidentally loaded the £10 hopper with £20 notes. Thus, the ATM mistakenly dispenses twenties, assuming they are, in fact, tenners.

In English law (covering England and Wales), you are entitled to keep money paid to you in error "under mistake of fact", but only if you honestly believe that the money is yours. Without any proof of mens rea ('guilty mind'), mistake of fact can be used as a defence against civil and criminal liability, but only for unintentional mistakes.

Thus, if you got £40 when you requested £20, then you have no reasonable argument to believe that the money was genuinely yours. Therefore, you should return the additional £20 to the bank, as you have no legal right to keep it.

However, if you requested £20, got £40 and £40 was debited from your account, then the cash is yours to keep, as neither you nor the bank has suffered any loss.

Clearly, if people get wind of a cash-machine windfall and start queuing round the block, then they know full well that what they're doing is wrong, both morally and legally. Thanks to their prior knowledge and intent, they are knowingly committing a crime. Therefore, the mistake-of-fact defence cannot apply.

The haul in the wall

Indeed, in these circumstances, banks are well within their rights to bring criminal charges of fraud ('acquiring pecuniary advantage by deception') against these queues of opportunists.

However, banks are fairly pragmatic about such instances, especially if the initial mistake was theirs. As it costs considerable sums to track down each overpaid £10, British banks usually write off these overpayments and, instead, concentrate on improving their cash-handling procedures.

Then again, some people go too far and pay the price. In 2003, three of four members of the Crosdale family from Coventry were tried, convicted and sent to jail for between 12 and 15 months for conspiracy to steal.

During a five-day meltdown, 56 Coventry Building Society machines spewed out £850,000 in error, allowing withdrawals to be made by any plastic card using any PIN (Personal Identification Number).

According to the Coventry Telegraph, the Crosdale criminals stole £134,410 from faulty cash machines, which they used to buy an Alfa Romeo car, flights to Jamaica and electrical goods. Nine other offenders received prison sentences for their part in plundering the coffers of the Coventry BS.

Clearly, this was theft and the Crosdales (and other offenders) were thieves, not cash-machine cowboys!

What about underpayments?

Then again, what happens if an ATM malfunctions and pays out less than you asked for?

Let's say that you type in £40, but get only £20. If only £20 is later deducted, then you've lost nothing. However, if £40 is debited and you get only £20, then your bank owes you £20.

Alas, getting this money back could prove tricky. My advice would be to use a camera-phone to take a picture of the faulty ATM, together with the cash dispensed. Send this information to your bank, together with any supporting evidence from other customers and staff present.

If your bank refuses to cough up the missing cash, then ask for a 'deadlock' letter to take to the independent Financial Ombudsman Service (FOS). In almost every case, if you have reasonable proof of loss, then the FOS will rule in your favour.

It's not just bank errors you need to be aware of at the cash point though - there are also fraudsters only too happy to separate you from your hard-earned cash.

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