When you transfer cryptocurrencies usually you have to be sure of one thing that the receiving address is correct. This is not the case when you transfer money with banks because you have to fill many details, like; account holder name, address, account number and sort code.
When transferring funds with Barclays, if you type the wrong sort code the funds will go to the wrong person even if you had the account name, the account number and address typed correctly. You can choose even Mickey Mouse as an account holder name and the transfer will go through because account names do not match sort codes in their bank system.
This is what happened to Peter Teich, a story published by “The Guardian” reveals a big flaw in the banking system. The man sent his solicitor the correct details except for the sort code, in order to receive £193,000 inheritance after the death of his father. Despite the correct details except for the wrong sort code, the transfer went through sending the funds to the wrong person.
The bank washed her hands saying that it was the clients’ fault typing the wrong digit and that they can not do anything to recover the funds and offered the man £25 as a token gesture as the bank stated in a letter sent to him.
“Due to an error on your part, the funds were applied to another customer … clearly you were mis-advised about the funds being restored to your account, and in recognition of this, I have credited your account with a small token gesture of £25.”
The bank knew where the funds where sitting but did not do anything to help the customer while the recipient of the £193,000 started withdrawing the money.
To recover the lost money the man went to the court first to force the bank to tell him the name of the dishonest receiver who refused to turn back the £193,000. Only this process cost him £12,000 in legal expenses and court fees.
Then, when he learned the name of the receiver he opened another case to get back the lost funds which cost him another £34,000 in legal expenses and court fees.
Finally, after much stress and unnecessary expenses, the man got back his £193,000 inheritance funds.
After recovering the funds the man asked the bank to pay the court fees but the bank refused to do it. Then the man asked for “The Guardian” Newspaper help and the bank immediately agreed to pai the all legal and court fees adding another £750 as compensation.
Many would argue that the man was able to recover his funds at the end unlike in crypto where the funds would have been lost forever. But how can be a bank so irresponsible to not match account holder names with sort codes? In crypto, you have only one element which is the receiver address and you have full knowledge that it is only your responsibility to type it correctly and that there is not a third party to censor or help you.
But when speaking about bank transfers this third party is there to censor you when it is needed but it is not there when you need their help.