What’s weird is it sounds like this is really Revolut’s problem, or at least the cash is being withdrawn from Revolut accounts. Instant access to bank transfers, where i.e. a brokerage loans you money while ACH clears, is a pretty common feature in the USA, but it’s abused heavily by fraudsters and obvious things like ATM withdrawals aren’t allowed. Wonder why this broke down.
I don't know how the system works in Ireland, but based on what I've read here, I believe the end result is this: Revolut's bank account got 500 euros from BoI, and the customer withdrew the 500 euros to end up with a second account with no money on it. It's now up to BoI to get the money to Revolut, since they authorised the transaction.
This means BoI's customers are now 500 euros in debt. Most likely, the accounts will be overdrawn, which usually comes with hefty fees if not paid back in time. BoI charges a 9.4% interest on overdraft accounts.
If your account is overdrawn, interest is charged on the full overdrawn balance, regardless of whether the overdraft is within an agreed overdraft limit or there is an unauthorised overdraft. Lending criteria, terms and conditions apply. Applicants must be over the age of 18 years old.
If the customers never bother to pay back the 500 euros they borrowed, the debt will probably be sold to debt collection agencies which can make the lives of the people that tried to steal money from their bank quite bad, especially if they send the more ruthless debt collectors. There's a good chance the loan will also end up on the Central Credit Register, potentially making future loans quite problematic.
I don't think Revolut did anything wrong here, BoI should never have authorised the withdrawal. The article mentions a history of technical issues so I can imagine that some API endpoint didn't check for a positive balance before sending money to Revolut.
If the transfer was never authorised by BoI and only provisionally approved, the fraudsters will probably have the same problems, but they'd owe the money to Revolut rather than BoI.
Either way, the bank is probably going to get their money back one way or another.
>especially if they send the more ruthless debt collectors.
Is this how it really works? I was under the impression that the debt collectors by the debt at pennies on the dollar, and then attempt to collect as much of the full amount as possible. These are the ruthless bastards. I do not believe the bank is sending them as the bank is done with you as soon as they sell that debt.
You're right that the bank's involvement stops as soon as the debt is sold, but depending on how lucky you are, your debt may be split up or combined with other debt and sold on, or collection agencies can be hired to try and collect on the debt.
As far as I know, the bank isn't a bad institution to be indebted to. It's the people your debt gets sold to that you need to be afraid of.
The root issue is that BOI have/had an issue trying to retrieve balances. At which point they have two options: prevent transactions if the balance cannot be verified (which would deny people access to their own money), or allow transactions if the balance cannot be verified (which enables people to go overdrawn).
SEPA transfers are near-instantaneous, this isn't access to funds that haven't cleared, it's access to funds which have already been transferred. None of this is really specific to Revolut, they're just the most common reason for "the man on the street" to have a second account to receive a transfer.
> obvious things like ATM withdrawals aren’t allowed
I don't know if it's still common to run things this way, but I've worked for a few banks where the core database stopped running all OLTP for a short period every day for tasks like settlement and interest calculations, etc.. During that time they'd still allow ATM withdrawals, and if you knew the schedule it was possible to go into an unapproved overdraft.
