Recourse for a Direct Deposit to wrong bank account | Income tax filing | Discussion forum

There is only a three business day window for CRA and its bank to correct a direct deposit. Even then, the direct deposit recipient has 90 days afterwards to refuse the correction. See previous post.

After that window closes, CRA would need to pursue the recipient outside the banking system, like through its tax collection powers.

No reason needed. Just that the correction debit is "unauthorized". Same as if some fitness club I never heard of starts debiting money out of my chequing account.

As far as her financial institution is concerned, your daughter-in-law has no legal standing in the matter yet because CRA originated the direct deposit and not her. CRA needs to be involved.

Her financial institution also made no error. It delivered the funds to the exact branch and account number the sender, CRA, instructed.

She is in a similar situation as Credit Suisse was when it wired $1.5 million to the wrong account.

There's nothing wrong with the system. The rules around direct deposits and wire transfers, by design, give certainty to the fund recipient. Otherwise, the recipient wouldn't immediately fulfill their part of an agreement, like hand over the keys to a house, on seeing the wire transfer or direct deposit appear in their bank account. That's also why a bank normally places no holds on funds arriving by direct deposit.

I'm not aware of any Payments Canada requirement for a financial institution to also match the "Payee Name" field of a direct deposit against the name on the receiving account. I think that's up to each financial institition.

I suspect financial institutions typically don't and do a match on the institution, transit, and account numbers only.

I haven't heard any stories about payroll deposits of women being rejected because she changed her name after getting married and updated her name at work before she updated her name on accounts at the bank.

Norman1 said
No reason needed. Just that the correction debit is "unauthorized". Same as if some fitness club I never heard of starts debiting money out of my chequing account.

As far as her financial institution is concerned, your daughter-in-law has no legal standing in the matter yet because CRA originated the direct deposit and not her. CRA needs to be involved.

Her financial institution also made no error. It delivered the funds to the exact branch and account number the sender, CRA, instructed.

She is in a similar situation as Credit Suisse was when it wired $1.5 million to the wrong account.

There's nothing wrong with the system. The rules around direct deposits and wire transfers, by design, give certainty to the fund recipient. Otherwise, the recipient wouldn't immediately fulfill their part of an agreement, like hand over the keys to a house, on seeing the wire transfer or direct deposit appear in their bank account. That's also why a bank normally places no holds on funds arriving by direct deposit.  

And, according to Frugal Lady, the CRA didn't do anything wrong either since it sent the funds to the account specified by the daughter in-law.

Would that not only verify that the actual account number exists? Not who are the owners of that account? CRA receives about 30 million tax returns a year and for this tax year to May 29th, there have been 13,035,924 refunds by direct deposit.
https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/individual-income-tax-return-statistics.html

A good portion of those would have the same direct deposit information on file this year as in previous years but many would not due to first time direct deposit or changing bank accounts. Perhaps 1M of them? 2M? How much parenting should CRA do?

cgouimet said

The way this works with Hubert for example is when you set up a link to an account, Hubert sends two small deposits (pennies) to that account. Once you receive the small deposits you go back to Hubert and confirm the value of each deposit. Only then will the link be enabled.  

I have used micro-deposit a few times to establish such links and that has been highly appreciated, but do you really think CRA is going to (should) do that on your behalf? Why should they make the micro-deposits and wait for you to cycle back to CRA on MyAccount to validate the link? Is that the sort of thing you would expect employers to also do for direct deposits? Neither CRA nor employers are banks and they should have reason to expect individuals to know what they are doing and to be responsible for their actions.

What do you do for the likes of those on this forum who do not wish to do financial transactions (or almost anything including email access to MyAccount) electronically but still want refunds direct deposited?

To put it into perspective, I am responsible for making sure I send e-transfers to the right email address (recipient). It follows that I am fully responsible for direct deposits, pre-authorized debits, etc.

I assume you strictly mean links for fund transfers between bank/CU accounts? I've set up many pre-authorized debits to bank accounts and charges to credit cards over the years without any validation requested. I also set up some direct deposits for annuity/pension income to my bank account without validations, void cheques, etc. I think you may be expecting too much from such relationships.

However, to get back to the OP's issue, I think it will take, as I think Norman1 already said, a request to CRA to have them try to action a retrieval on the DIL's behalf. I agree with Norman1 that logically neither the recipient nor the bank can (or should) initiate any action.

Otherwise, it may need to be considered as a life lesson to be more careful next time. All of us have experienced life lessons from time to time.

savemoresaveoften said
bad mistake. Some costs less, some costs more, learn from it.

CRA has done nothing wrong. All this would not have happened if the correct account info was supplied.

The involving bank also does nothing wrong either.

It may be unfortunate but it is what it is. Thats why one has to be careful when it comes to money issue especially online.  

Indeed