My former employer deposited someone else's paycheck into my account and I've spent the money on bills. What are my options?

Let’s say, for example, that Nevin received a $600 deposit into his bank account from a company he worked for years ago. Nevin spent the money on bills, many of which were on autopay. He says the money came out of his account without him realizing it, but now his former employer contacted him and wants the cash back.

Does Nevin have to pay back the funds, even if he already spent the cash on his bills? Unfortunately for Nevin, legal experts believe the answer is a resounding yes.

The improper payment could be reversed

The first thing Nevin needs to know is that his former employer may be able to take back the money, whether he likes it or not.

However, the company’s ability to do so is limited by the National Automated Clearing House Association (NACHA) Operating Rules and Guidelines.

Under NACHA rules:

• The company must initiate the reversal of the deposited funds within five banking days of the original settlement date. If more time than that has passed, the company can’t just pull the funds out.
• The employer would also be required to reverse the entire amount of the mistaken deposit and provide written notice to Nevin.
• If Nevin’s account has insufficient funds, the reversal transaction generally wouldn’t be processed.

Since Nevin already spent some of the money on bills, if his bank account balance is below $600, the employer typically can’t just retrieve the cash automatically. There won’t be enough money in the account to do so, and the ACH reversal would probably be returned to the employer for insufficient funds.

Nevin needs to repay the money or could face legal consequences

While the company can’t just take the money and put Nevin’s account into the negative, this doesn’t mean Nevin is in the clear and can just treat the money as a windfall.