This month, a federal appeals court issued a major ruling involving millions of dollars a giant bank said it accidentally sent to creditors — and whether the people who received that money need to give it back.

The court ruled that $500 million had to be returned to Citigroup, who said it accidentally sent the money to a group of lenders for the now-bankrupt cosmetics company Revlon. The whole saga is a bit complicated to follow, but there’s a teachable moment in it about what happens when you erroneously send someone money and whether or not you can get it back.

Carla Sanchez-Adams, a staff attorney at the National Consumer Law Center, said the rules around how transactions are protected depend on how the money is transferred. While the institutions in the Revlon case used wire transfers, everyday consumers widely use peer-to-peer fast-payment systems like Venmo and Zelle, which have been under increased scrutiny for fraud and accidental payments. Because of that distinction, she said, consumers may have a tough time asking banks for help when they’re trying to get their money back.

The following is an edited transcript of Sanchez-Adams’ conversation with Marketplace’s Sabri Ben-Achour.

Sabri Ben-Achour: First of all, how do you accidentally send $900 million to anyone?

Carla Sanchez-Adams: Yeah, I mean, the story’s crazy. But it just shows how easy it is to make mistakes. I mean, if a big bank like Citi makes mistakes and expects money to be returned to it, then they should apply the same rules to consumers who make mistakes.

Ben-Achour: Just to sort of break this down here, why did the court say that people had to send the money back to Citi? Why not finders-keepers?

Sanchez-Adams: Yeah, so the Citi case is interesting because, you know, they actually lost at the first level, and then it got appealed. And the court reversed it. And initially, the judges said, you know, because the investors relied upon that money, and it was owed anyway, they didn’t have a way to know that they shouldn’t have kept that money, that they were entitled to keep it. This is like super breaking it down, right? And then, you know, the appellate court reversed that. And, you know, there were three judges, and one of the judges said, you know, put simply, you don’t get to keep money sent to you by mistake unless you’re entitled to it anyway. But it’s interesting because here, the case is that it wasn’t Citi trying to get the money back from the bank of the investors. Citi was trying to get money back from the investors. And it’s actually more analogous to when a consumer is defrauded, and or accidentally sent, you know, consumer accidentally sends payment to someone, and instead of trying to get it back from their bank, or the fraudsters or the mistaken person’s bank, they then try to get it from the person who received the money. So it’s a little different than even what we see in the consumer space. But the principles still apply.

Ben-Achour: What’s interesting here is that I recall seeing warnings, you know, anytime I send a PayPal or Venmo or Zelle it says, you know, if you send this to the wrong person, you’re not getting it back. So I just wonder if the rules are somehow different for a big bank versus for an individual.

Sanchez-Adams: That question is a little complicated because banks don’t generally send other banks money using Zelle. In this case, they were using a wire transfer. The law that applies to wire transfer is different than the law that applies in this case to something like Zelle that you get that payment of, hey, that notification of, “If you send it, you’re not getting it back,” is something that is unique to faster payments because the whole premise of faster payments is that they’re irrevocable. So they’re irreversible. Once they’re gone, you can’t claw that money back. However, that doesn’t mean that the money disappears forever and you can’t get it back. There are still protections under the law, under the Electronic Fund Transfer Act, that if the transaction was unauthorized or if there was an error, then the bank has to do an investigation and they have to credit your account. And the burden is on them. For example, in the case of an unauthorized transaction, the burden is on the bank to prove that it was authorized. And so there are protections, it’s just a different mechanism and a different scheme. And so, you know, again, if a bank is acting as a lender, or a bank — and administrators, in this case, Revlon, for Revlon, they were an administrator — they were sending payment to investors through a wire transfer. They weren’t using these, you know, newer, faster payments models.

Ben-Achour: So different systems of sending money, different systems of law that apply, different protections that are there.

Sanchez-Adams: That is correct. But the underlying principle, I think that you’re getting at and that you see, and we all have a visceral reaction to, is “But if someone’s not entitled to that, then they should not get to keep it,” right? So if it was a mistake, or if it was, you know, fraud or something, they’re not entitled to keep that money, and there should be a way for the person who made the mistake to get the money back.

Ben-Achour: Yeah. So for you and I, what is that way?

Sanchez-Adams: There is a provision under that Electronic Fund Transfer Act about errors and how errors are defined. And so this is an error. It was a mistake. You know, that’s not what was intended, the payment wasn’t intended to be that amount or to that person. So the bank should comply with the provision and do an investigation if the consumer disputes it, and then, you know, they can’t reverse the transaction. That’s the challenge with these faster payments because they’re irrevocable, they can’t reverse it, but they can request that money back from the receiving bank. So the bank that I sent the payment through can request it from the bank that received it. But they just don’t, they don’t do it, they don’t think they should. And it’s a real problem. There is this challenge with the Revlon case, for example, they thought that the law was pretty settled and that they were entitled to the money back. But the recipients were like, “Nope, we’re entitled to it.” And they had the resources and means to be able to hire lawyers, to file a lawsuit, to wait in litigation, you know, for an extended period of time, you know, two years. And most people who are consumers to have these problems and these disputes don’t have the resources to file a lawsuit over even $1,000, right? A thousand dollars to big banks isn’t much, but to a person who’s living paycheck to paycheck, and that’s their rent and they’re gonna get evicted, it’s a big deal. That, you know, there’s also that the system is weighed against the little guy in some ways because they don’t have the resources to put pressure to get the banks to do the right thing.

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