Will Bank of Ireland clients who exploited the technical glitch have to pay overdraft charges?

Question

I saw many articles reporting that due to a technical glitch a lot of clients of the Bank of Ireland could withdraw big sums at the ATM machines. The spokesperson of the Bank of Ireland declared that those sums will be debited on the customers' accounts. But they did not tell anything more.

I am not familiar with the Irish system, but I had an account in the Anglo-Saxon area and I know that overdraft charges can be hefty. So, I would like to know if those customers will have to pay those charges, if present, even if they went in overdraft due to a technical glitch.

Answer 1

Under normal circumstances, yes the customers would be facing interest and charges. However, as customers could not see their balance they could have gone overdrawn accidentally, and for this reason the Bank of Ireland are not going to charge. I don't know if this will apply to those who deliberately exploited this bug.

See BOI suggests it won't charge interest to customers who withdrew extra cash during IT glitch

Answer 2

It's tricky to know what they can and what they can't do legally.

Obviously if you did withdraw 1000 Euros that are not yours you have to pay the money back. People have actually gone to jail for theft for taking money that way. If you don't pay it back, you will have to pay interest.

Now I have an allowed overdraft on my account that I can just use, and beyond that it is an unallowed overdraft with different (more expensive) rules. If that money was within the overdraft that you were allowed anyway, there should be no problem. If that money was beyond your regular overdraft, then it is hard to say if legally this was an allowed overdraft or not. Most likely not.

For anyone getting into this or a similar situation: If there's money in your account that isn't yours then don't touch it. You may save yourself a lot of trouble. Especially if you used it to buy things that you can't afford, because you won't get away with it.

Answer 3

I read a Dutch news article that says they don't have to pay overdraft fees in this specific case:

Klanten die nu in financiële problemen raken vanwege een negatief saldo kunnen contact opnemen met de bank. Ze hoeven geen rente te betalen over het bedrag dat ze rood staan.

Which translates to something like "Customers that get into financial problems due to a negative balance can contact the bank. They don't have to pay overdraft fees over their negative balance."

Sadly the news article doesn't quote a direct source, but this news site is usually right.

Answer 4

Most banks have written into their terms of service that in the event of an error by the bank resulting in a misallocation of funds, the account holder must remit any misallocated funds back to the institution within a certain period of time to avoid any overdraft charges. Usually it's within 1 or 2 weeks. So, it depends, and you'll need to read your deposit account agreement, or better yet, contact your bank directly to know for sure.

Answer 5

40 years ago, my bank used to do this all the time (but cash limits were smaller then). When the bank mainframe went offline, the ATMS would work autonomously, allowing $200 withdrawals without checking the account balance. After a while, they fixed it so that their ATMs were just (frequently) shut.

The bank did not charge overdraft fees for over-withdrawals like this. It only tried to recover the money.

That bank went out business long ago. I wish I could say that it was because their ATM system was hopeless, but actually it went out of business because of political interference and hopeless risk management.

Answer 6

Let's suppose I have a bank account with 200 €

The bank in supposed to let me draw those 200 €, but no more.

The IT glitch seems to have made the ATM unable to obtain the current balance, making them to work offline. In this mode, the ATM works disconnected from the network, so it uses some generic limits. Thus, it can let me draw 250 € or 300 €, since it doesn't know how much money I have in my account. (Conversely, I might have a really high limit set, and the ATM -not knowing it- could be honoring a smaller one)

In a normal scenario, the ATM would not have allowed to draw 300 €. Or if it did (you are allowed to overdraft the account up to certain limit), it should had warned that it was subject to X fees. Plus, even if the customers wanted to check explicitly what their balance was prior to drawing the money, it that not available.

Thus, the reasonable approach is what they seem to be following, they debit from the account the amount actually drawed from the ATM, but not collecting extra overdraft charges from what was caused by their own systems malfunctioning.