2025 Session Last amended: 2004 session

§ 336.4A-204 — Refund of Payment and Duty of Customer to Report With Respect to Unauthorized Payment Order

Plain-Language Summary

If a bank accepts a payment order issued in the customer's name that was not authorized by the customer or is not enforceable against the customer, the bank must refund any payment it received from the customer that it is not entitled to keep, plus interest from the date it received the payment to the date of the refund. The customer loses the right to that interest (but not the refund itself) if the customer fails to use ordinary care to discover the unauthorized order and notify the bank within a reasonable time, not to exceed 90 days after the customer was notified that the order was accepted or the account was debited. The parties may set what counts as a reasonable time by agreement, but the bank's basic duty to refund cannot otherwise be changed by agreement.

336.4A-204 REFUND OF PAYMENT AND DUTY OF CUSTOMER TO REPORT WITH RESPECT TO UNAUTHORIZED PAYMENT ORDER.

(a) If a receiving bank accepts a payment order issued in the name of its customer as sender which is (i) not authorized and not effective as the order of the customer under section 336.4A-202, or (ii) not enforceable, in whole or in part, against the customer under section 336.4A-203, the bank shall refund any payment of the payment order received from the customer to the extent the bank is not entitled to enforce payment and shall pay interest on the refundable amount calculated from the date the bank received payment to the date of the refund. However, the customer is not entitled to interest from the bank on the amount to be refunded if the customer fails to exercise ordinary care to determine that the order was not authorized by the customer and to notify the bank of the relevant facts within a reasonable time not exceeding 90 days after the date the customer received notification from the bank that the order was accepted or that the customer’s account was debited with respect to the order. The bank is not entitled to any recovery from the customer on account of a failure by the customer to give notification as stated in this section.

(b) Reasonable time under subsection (a) may be fixed by agreement as stated in section 336.1-302(b), but the obligation of a receiving bank to refund payment as stated in subsection (a) may not otherwise be varied by agreement.

History:

1990 c 582 art 1 s 12; 2004 c 162 art 2 s 13

History: History: 1990 c 582 art 1 s 12; 2004 c 162 art 2 s 13

Practical Notes

If your bank pays out on a wire transfer that you did not authorize, the bank generally must give your money back with interest. To keep the interest, you need to catch the problem with ordinary care and tell the bank within a reasonable time (no more than 90 days after notice that the order was paid or your account was charged); missing that window costs you only the interest, not the refund.

Source: Minnesota Office of the Revisor of Statutes