5 times companies accidentally overpaid their customers
Ever wished that you woke up one day and landed in a bucketload of money? A few people's trillion-pound dream did come true in the UK on February 12 this year.
Due to Storm Arwen, there was a power cut all across the UK in November 2021. Power company Northern Powergrid compensated people who suffered through the power outage. But 74 people received cheques for over a trillion pound sterling.
A responsible customer, Gareth Hughes tweeted from Yorkshire on February 12 asking Northern Powergrid whether they could afford to compensate people with over a trillion Pound Sterling each. Hughes tweeted, "Thank you for our compensation payment Northpowergrid for the several days we were without power following Storm Arwen. Before I bank the cheque however, are you 100% certain you can afford this?"
As per the cheque sent out to Gareth, the power company was going to pay him £2,324,252,080,110. Or, 2.3 trillion pounds.
Northern Powergrid responded to the tweet and wrote, "Hi Gareth, Thanks for bringing this to our attention. Please DM us your contact details including address and postcode so we can correct this oversight." The company, in a statement, called it a clerical error.
A spokeswoman for Northern Powergrid said, "As soon as we identified the clerical error we ensured all 74 customers' cheques were stopped so they could not be cashed."
Gareth isn't the only one to bring the error to light on Twitter. Another user named Danielle Henderson tweeted, "Another appalling attempt to get compensation from Northpowergrid. If only they’d signed it. Storm Arwen was months ago now."
The amount on her check is £1,580,000,956,104. Or, 1.5 trillion pounds.
But this isn't the first time companies and government organsiations have accidentally sent out exorbitent amounts of money to customers.
Here are 5 that regretted their 'clerical errors':
1. UNEMPLOYED BOSTON RESIDENTS FORCED TO RETURN MONEY
The Department of Unemployment Assistance has asked 7,19,000 Boston residents to return the extra money they received between May 2020 and September 2021. The state is now trying to get nearly US $2.7 billion returned to them.
The DUA is well-known to overpay its recipients but their 'accident' this time made headlines because the excessive time they took to realise their fault. The Department's website currently says that their unemployed recipients will receive notices and will need to return the extra money they received.
The retrieval made news in January 2022 and on February 7, the DUA website released an update saying that were in the process of receiving federal guidance on how to proceed with it.
2. SANTANDER PAYS CUSTOMERS £130 MILLION FROM ITS OWN RESERVES
On December 25, 2021, Spanish bank Santander accidentally payed almost 130 million pounds from its own reserves in the UK.
About 2,000 people wrongly set up double transactions on an average of total 1,733 pounds. While the first transaction took place from the people's own bank account, the second one took place from Santander's reserves. The set-up transactions were either one-off or regular payment.
Ideally, the wrongly done transactions should have been debited from the sender's account both times, instead of Santander's own reserves.
The bank is currently struggling to retrieve the money as the customers who received the money hold accounts in other banks such as Barclays and HSBC.
3. CITIBANK MISTAKENLY GIVES $900 MILLION
Citibank sent across almost 900 million dollars to Revlon's lenders by mistake. The bank was acting as a loan agent for Revlon and was meant to wire an amount of almost US 8 million dollars to Revlon's lenders to pay off a loan. The transaction occured on August 11, 2020.
The bank, instead, sent across 900 million dollars. The bank immediately went to a district court in New York, filed a lawsuit for a full return, and said that it was human error that caused this blunder.
Other than 10 asset managers, all lenders returned the money and Citibank sued the asset managers for the nearly US $500 million they had accidentally received. Citigroup said that Revlon could not pay the bank. The group was unable to recover the amount from the asset managers.
US District Judge Jesse Furman in Manhattan said that wire transfers to the lenders were "final and complete transactions, not subject to revocation" and that this was the biggest blunder in banking history.
4. PENNSYLVANIANS RECEIVE OVERPAYEMENT NOTICES
In November 2021, it was reported that the Pennsylvania's Pandemic Unemployed Assistance made over 2,00,000 non-fraud overpayments. The state also estimates that more than 63,000 non-fraud payements were made by the regular Unemployment Compensation program of the state.
The PUA was set up in 2020 for gig-workers and the self-employed in Pennsylvania.
Reportedly, the state's Department of Labor and Industry was sending 'threatening messages' to the currently or formerly unemployed who are at no fault of their own.
A portion of the message reads, "Depending on your overpayment, the department can take actions to recover the amount due, including taking your future UC benefits, intercepting your federal income tax refund, filing a lien against you and/or pursuing criminal prosecution. Please read this notice carefully for additional information about your overpayment. If you are unable to repay your debt in full immediately, partial payments are accepted. The department recommends a minimum monthly payment of $40."
Other than being widely misleading as to whether the formerly unemployed are legally required to return the money or not, it is very hypocritical for the Department to behave like this when the fault is their own.
5. PHILADELPHIA OVERPAYS A SCHOOL DISTRICT
Reportedly, in the 2020 fiscal year, the Philadelphia Parking Authority overpaid their school district. The Authority claimed that the school district now owes them US $11.3 million dollars. Based on budget documents, the amount makes up a majority in the PPA’s US $14.7 million dollar payment to the district that year.
As per emails obtained by The Philadelphia Inquirer, the Authority has credited 'financial oversights' as the cause. The oversights involved 'long-term pension and post-employment benefit debts'.
Although the Authority has not been able to produce data that verifies their claim of financial oversights affecting their commitment to the district. When asked about the newly emerged debt, PPA chief financial officer Belinda Smith wrote in November 2021 that the PPA does not have the supporting documents.
Uri Monson, the district’s chief financial officer has said that the district would either repay the money or it will be deducted from the PPA’s future payments to them. He added that the district will be contesting the Authority's claim.