A woman was accidentally sent $1.2M and chose to keep it instead of returning. A situational ethics problem, presented by somebody too educated to understand the concept.
What are the ethics of giving back money that doesn’t belong to you?
By Kate Padgett Walsh, Associate Professor of Philosophy, Iowa State University2 June 2021
Oh boy, a philosophy major with an ethics question. Will this one have answers to offer, or will she take the Hedge Fund Manager’s shilling?
In Monopoly, a player who draws the card that says “BANK ERROR IN YOUR FAVOR. COLLECT $200” gets to keep the money.
But what happens when such a mistake occurs in real life?
Kelyn Spadoni, a 911 dispatcher, recently received quite a bit more than the US$80 she was expecting when financial brokerage firm Charles Schwab mistakenly transferred more than $1.2 million to her account, apparently because of a software glitch. When she discovered the extra money, she promptly transferred those funds to her other accounts and bought a new car and house, among other purchases.
Another Wakandan fell into the usual pattern of fools and their money.
One could ask whether it was unethical for her to keep the money instead of trying to return it. As a scholar who studies the ethics of debt and finance, I believe the answer is more complex than a simple “yes” or “no.”
No. The Schwab ‘terms of service’ say you have to give back any accidental overpayments. This must happen frequently for them. I had to find an Aussie news outlet to discover that detail… American media outlets, liberal and conservative both, are Converged to the point of copypasta.
PhD scholar 0, Internet nobody 1.
Consider another example: Suppose you found a wallet full of cash lying on the ground. Usually, the right thing to do would be to contact the wallet’s owner and return it, money included.
Usually, you don’t find abandoned wallets full of cash. Serious question: under what circumstances does that happen?
I know exactly one time that it happened in real life, to a friend-of-a-friend who found a cash-stuffed wallet in the middle of the street one day. I’m talking a $5k-stuffed wallet, no ID. She dutifully called the police.
“This is on which street? *keyboard noises* Were there gunshots in your area last night?”
“That’s drug money you got there, honey. The deal went south. You can turn it in and we’ll keep it, but we won’t be giving it back to Tyrone if you know what I mean.”
“I’ll keep it, then.”
“Thought you might. Congratulations, honey. *click*”
Yeah, so, wallets of cash don’t just lie around. If Charles Schwab is losing a million bucks at a time due to ‘banking errors’, enough that they had to reword their contracts, then I smell something shady. I’ll have more at the end but first, let’s let Philosophy Professor Barbie hit rock bottom. Remember for the following, that she doesn’t know that Spadoni had an explicit contractual obligation to return the cash.
The Greek philosopher Aristotle helped to explain why people normally have a moral obligation to return the belongings of others. Being truthful and treating others fairly are key virtues in life, he argued. A good person acts with integrity and a sense of justice rather than being deceitful and greedy.
Spadoni not only spent much of the money she mistakenly received, but she refused to respond when Charles Schwab contacted her. For a whole month she ignored calls, emails and text messages the company sent her. She has since been arrested on charges of fraud and theft, apparently for trying to keep what did not not belong to her.
…Prima facie moral obligations depend on particular details of situations. Imagine, for instance, seeing a billionaire drop $10 on the ground. It would still be commendable to return that money, but the moral obligation to do so is weaker than in other cases.
It didn’t take long for Mizz Philosophy to settle for being a normally good person.
Similarly, it is notable that in Spadoni’s case, she received money because of an error by a large financial institution. Moral obligations to individuals do not always translate to the institutional level, especially when an institution itself does not treat people with integrity and fairness.
The Christian says “we must be honest”. The credentialed ethics professor says “we normally should try to be honest unless the situation is special.” (For the slow class, that means “don’t be honest”.)
Prima facie moral obligations can also be outweighed by other obligations. Imagine, for instance, that the person who found the wallet of cash needed money to provide housing or medical care for their children. Alternatively, imagine that the owner of the wallet was a notorious criminal who would use the returned cash to hurt others.
That’s just being female. Care-based morality!
These scenarios identify additional prima facie moral obligations to care for people in need and prevent harm to others. Doing what is right in real life requires weighing all of the relevant moral considerations.
Care. Based. Morality. Walsh might have a PhD in philosophy but her understanding of social ethics has not progressed beyond “babies”.
This is important because, while Spadoni’s case may appear unique, it is actually commonplace to receive money that belongs to others. Credit cards, mortgages, student loans and payday loans, for example, are all forms of credit in which the borrower temporarily receives money that is not their own.
The moral considerations people face when trying to pay back debts mirror the questions about what to do with money that is found or received in error.
No. When the financial elites make loans that they expect the borrower will never be able to repay, there’s an entirely different level of morality at work: usury.
Spadoni was not loaned that money. I strongly suspect that if she accidentally gave Schwab too much money, that Chucky would have had zero obligation to return it.
In an economy saturated with debt, with more than half of adults living from paycheck to paycheck, people can end up being forced to choose between making debt payments and getting medical care or paying for rent.
A small number of them can get relief by filing for bankruptcy. Bankruptcy protections are meant to help those whose debts interfere with access to important goods and services like food, housing, education and medical care. The idea is that debts shouldn’t take away people’s ability to provide for themselves and their family.
However, a 2005 law made it more difficult and costly to file for bankruptcy, especially for those who are already behind on bills. Many of the people who would benefit from declaring bankruptcy are unable to do so because they cannot afford the legal fees.
Yes, our banks are enslaving us using debt.
Wells Fargo, for instance, was fined $3 billion in 2018 for fraudulently signing people up for credit accounts with fees. And payday lenders operate by targeting people who are already struggling to make ends meet and signing them up for loans they may not be able to repay on time. When borrowers miss a payment, they experience ballooning interest rates and fees, miring them further in debt.
These examples indicate just some of the ways in which the obligation to return money to others really is a prima facie obligation and thus ultimately subject to limits in the real world.
Translation, Spadoni needed the money (quite possible) and Charles Schwab is an evil bankster group preying upon the weak & gullible (see below: Spadoni), therefore she gets to keep the money. Sisterhood uber alles.
You probably want to hear more about Spadoni.
I bet the parish cops just loved this dispatcher’s helpful and charming attitude.
It’s not quite the nearly $1 billion blunder that Citigroup Inc. made last summer, but Charles Schwab Corp. said it accidentally sent more than $1 million to the Fidelity Brokerage Services account of a woman in Louisiana.
Schwab blamed an “issue created by a software enhancement” for erroneously transferring $1.2 million in February to the Fidelity account of Kelyn Spadoni, rather than the $82.56 she had requested, according to a lawsuit filed in federal court in New Orleans last month. When the company realized the mistake and attempted to take the money back, it was gone and Spadoni wasn’t answering her phone, the bank said.
After a month of failed attempts to recover the cash, Schwab filed a criminal complaint on April 6, Jefferson Parish Sheriff’s Captain Jason Rivarde said. Spadoni, 33, was arrested the next day in Harvey, Louisiana, on charges of bank fraud, theft and illegal transmission of monetary funds, he said. She’d transferred about $350,000 into another account and used it to buy a 2021 Hyundai Genesis sport-utility vehicle and a home, Rivarde said.
“The vast majority of the missing money has been recovered at this point by the seizure of the vehicle and the reversal of the house sale,” Rivarde said.
Spadoni was fired from her job as a 911 dispatcher in the parish, Rivarde said. She was released April 8 on a bail bond, court records show.
I would not call it morally wrong for her to keep the accidentally-given money in violation of a one-sided contract. However, if you play the fat cats’ game of “rules for thee but not for me” then don’t live where they can reach you. Spadoni should have gone back to Africa. *GQ ducks*
It’s odd that I reached the same conclusion as Ms. Walsh. In my case, I simply don’t regard that contract clause as being valid. “If we make a mistake in your benefit then you have to repay it”? Not unless that comes with “we promise to never ‘update’ this contract after you’ve agreed to it and certify that if our employees get caught doing anything shady, we must reimburse you on penalty of our entire boardroom going to prison on fraud charges”.
No more one-way streets. No more too-big-to-fail. No more adhesion contracts written by the bureaucrat for the benefit of the powerful.
Schwab’s mistake is among the technical blunders — such as misplaced decimal points and “fat finger” errors — that financial firms dread. But it’s a trifle compared to the goof by Citigroup last summer. The bank meant to make an interest payment to Revlon Inc. lenders and instead wired them the principal, too, totaling $900 million. A judge later ruled many of the lenders could keep the money, though that decision is on appeal.
That makes sense because Citigroup accidentally repaid the loan. Which begs the questions of why they took out a loan they didn’t need and then insisted, with the force of the State, to be allowed to stay in debt.
But Citigroup’s misadventure pales in comparison the error made in 2018 by Deutsche Bank AG, which inadvertently transferred 28 billion euros ($33.4 billion) to one of its outside accounts.
On the one hand, mistakes happen. On the other hand, banksters fling so much money around, often between secret or encrypted accounts, that there was insufficient oversight on a $33b transfer. There’s got to be skullduggery going on. In fact, we know there’s skullduggery just from their one-two punches of “easy credit, hard bankruptcy”.
The reason these mistaken transfers happen in the first place, aside from migrant visa hirelings, is because the Powers That Be don’t want their money to be followed. Until they do.