It’s advertised as a safe and reliable way to send money, but an Ontario couple claim the $10,000 wire transfer they sent to their adult son was deposited into a stranger’s account, then disappeared.
Barbara and Robert Behan wanted to help their son and his young family finish the basement of their home, so they sent the money as a Christmas present.
The transfer was sent from the couple’s TD bank account in Penetanguishene, Ont., on Dec. 21 to a CIBC branch in Calgary where their son has been banking for decades. But the money never appeared in his account.
Weeks later, CIBC told the Behans that the money was gone – deposited in someone else’s account the day it was sent – and the account holder withdrew the $10,000 the next day, then closed the account.
“It’s inconceivable. Apparently this person had the exact same account number as our son,” Barbara said.
“But they [CIBC] never matched the name of the account number to the name of our son. They just put it on the wrong person’s account. Nobody checked.”
CIBC says customers can have identical account numbers. It’s another set of numbers – the five-digit transit numbers that identify a specific branch – that differentiates the accounts.
According to banking expert Werner Antweiler, all of this could have been avoided if banks had implemented a better system to ensure that wire transfers end up in the right place.
“It really indicates the [issues] with the current system,” said Antweiler, an associate professor at the Sauder School of Business at the University of British Columbia.
“A simple mistake can escalate very quickly because once the money has left an account it is not easy, and often not possible, to get it back…so getting the right information is really imperative of transfer.”
After two months of battling with the banks, the CIBC ombudsman decided the bank was not at fault, but offered the couple half of their money as a show of goodwill.
The bank refunded the full amount after Go Public contacted them.
WATCH | The bank transfer has disappeared:
“Many Sleepless Nights”
Until then, the Behans say they’ve spent “many sleepless nights” wondering if they’ll ever see their money again.
“I was constantly worrying. I said to all the bank managers and everyone we came in contact with, ‘If it was your $10,000, would you be so laid back about it?’ It’s $10,000. It’s not $1.50. It’s hard-earned money,” Barbara said. The couple say they’ve been back and forth between the two banks, without no one takes responsibility.
TD told the couple that the missing funds were CIBC’s fault because they placed the money in someone else’s account after TD successfully transferred it.
The CIBC ombudsman blamed the Behans, telling them that instead of providing the transit number for their son’s Calgary branch, they should have given TD the one for Burlington, Ontario, where he opened his account decades ago.
The ombudsman also said the bank was trying to recover the money from the other account holder, “through legal action”.
“We encourage customers to double-check this information when sending payments to ensure funds are delivered to the intended recipient,” CIBC spokesperson Trish Tervit wrote in an email to Go Public.
The couple say any issues should have been reported and the money returned.
“He should never have reached the point where he did,” Barbara said.
Such errors are the direct result of Canada’s flawed wire transfer system, Antweiler says — a system, called Lynx, that is error-prone even though it was only launched last September. The majority of banks operating in Canada use Lynx, including CIBC, with some exceptions.
“There are a large number of errors that occur when forms are filled out [and] the slightest mistake can lead to these kinds of situations where people are shelled out, often quite deeply shelled out,” he said.
Lynx is only used in Canada. It is owned and operated by the not-for-profit Payments Canada, which is regulated by organizations such as chartered banks and the Bank of Canada. It supports almost every system (including debit cards, checks, and wire transfers, but not credit cards) used to make payments or send money.
More than 11 million transactions valued at $126 trillion were processed between financial institutions in 2021, including international payments, according to Payments Canada.
Lynx doesn’t require banks to match the account number with the account holder’s name — and Antweiler says most banks don’t — increasing the risk of mistakes like what happened to Behans.
“We need to make it easier for Canadians to transfer money between banks…a system that’s not as error-prone, where if a few characters are wrong, the money ends up at the wrong place,” he said.
Lynx replaced the Large Value Transfer System (LVTS) that had been in place for more than 20 years, according to the Payments Canada website. This call lynx “another milestone in payments innovation.”
There is a solution, says Antweiler, pointing to other countries that use the International Bank Account Number (IBAN) system.
Unlike Lynx – which uses a three-digit bank code, a five-digit transit code and the account number – IBAN uses a long alphanumeric code that allows its built-in error detection to flag problems, leaving little room to human error.
“This means that if there is an error, such as a transposed number or a missing digit, [the transfer] would not work,” Antweiler said.
As of January, 79 countries were using the IBAN system, including countries from the EU, the Middle East, North Africa and the Caribbean.
Go Public asked five of Canada’s major banks, Finance Canada and Payments Canada, for wire transfer error statistics, but none made the information available.
The Behans say a safer and more reliable system is needed.
“We discovered during this time that our banking system, our banks, don’t talk to each other. They don’t work together. They don’t have the same wire transfer forms. They don’t talk back and forth,” said Robert. .
“What we say is how are [the banks] going to fix it in the future so it doesn’t happen to anyone else?”
Go Public asked Payments Canada about issues with Lynx and whether it was considering switching to the IBAN system, but it did not respond to questions.
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