I owed the bank some money and I tried too direct deposit my tax return into my mothers account. I then found out the back took that money and paid the money back that I owed them. Is that legal?
Did you have an account in the same bank as your mother? When the refund hit your mother's account it was bounced into the Item Reject queue since your name was not on her account. A staffer in Item Processing checked it and noted that you had an account with the bank so they diverted it to your account instead of sending it back to the IRS. That's perfectly legal, by the way. Since you owed the bank money, they exercised their Right of Offset to pay down the debt that you owed them. That too is perfectly legal, and is spelled out in the contract that you have with the bank.
If you are not on a joint account with your mother, I would think that it's illegal, as you owe the bank money, not your mom. However, I'm guessing that it is legal since the bank did do it.
The person the cheque is made out to must sign the cheque, and then write 'pay to the order of _______ (your name)' on the back. You must then sign it. But almost always, they, the bank, needs to be able to verify that the cheque is signed by the original payee. Unless the original payee has an account at the same branch, or you have their ID, or the bank knows both you and the original payee, you will probably be out of luck. The world is a lot less trusting place than it was 20 - 25 years ago. Fraud is always the culprit.
Well you cannot deposit your check into your moms account unless you are a signer. So if you were trying to a direct deposit it most likely got rejected. Sure a teller might be fooled if you sign it over, but banks/credit unions are not allowed to deposit tax checks, stimulus, (basically government checks) into other peoples accounts unless one or more persons are listed on the check. And yes a bank you owe money to can get your funds if they get a court order/injunction. They can even garnish your wages if need be till you pay back the debt.
The lessons learned are clear, never trust or use a bank; the range of damages they bring and the powers for them to do it are only increasing. You need to open an account with a credit union.
