Mistaken refund by corporate chain till computer system

Question

Meet Bob. Bob purchased 10 bottles of champagne from a large grocery chain, triggering an automatically applied "multi buy" discount of 8%. He then brings the receipt back and returns 3 of the bottles, which is not enough to trigger the bulk discount, so they are refunded at three times the full price. He then returns the other 7, which appear to also get processed at full price by the till, so he is basically ahead by 8% of the value of the whole load.

He looks down at the receipts confused at the discrepancy and knackered he initially thinks he is short that amount and was refunded too little and asks, having a curious mind anyway, where the discrepancy may come from. The cashier then pulls out her own calculator to find that he has been over refunded.

She asks Bob to wait while she goes off in the back of the store to find out what to do. Bob had had a phone call with someone scheduled but nonetheless cooperatively waited for the manager to return from the back for some 20 minutes.

Finally she returns and says that she has been told on the phone by the central fraud department that she should charge him a placeholder purchase for the differential amount.

Bob repays the amount and then leaves.

However, what if Bob had not said anything in the first place or even not noticed? What would have been the legal standing between the parties? Would he have been guilty of "fraud" as casually suggested by the store manager? What if he'd simply been in more of a rush and couldn't have afforded to wait for the manager to return for him to be told to pay money back?

Or, what if he had not had any more remaining money available in his account as he had spent it all on the champagne, while the refunds may take several business days to clear?

I assume that the answer is actually fairly simple and along the lines of when one is overpaid by work due to clerical payroll errors and the money doesn't actually become one's money just because one was somehow transferred it in error but the meat space retail setting just seems to add lots more nuanced layers to it.

And yes inspired indeed by a true story.

England and Wales specified, other jurisdictions as usual welcome.

Answer 1

Knowingly tricking someone into repaying more than you are due is fraud

Fraud is defined generally very akin to the test new-york-state uses. There are 5 factors to determine Fraud (emphasis mine):

Under New York law, in order to prevail on a fraud claim, a plaintiff must prove five elements by clear and convincing evidence: "(1) a material misrepresentation or omission of fact, (2) made with knowledge of its falsity, (3) with an intent to defraud, and (4) reasonable reliance on the part of the plaintiff, (5) that causes damage to the plaintiff." Schlaifer IV, 119 F.3d at 98.

Schlaifer Nance Co., Inc. v. Est. of Warhol, 194 F.3d 323, 336 (2d Cir. 1999)

Here, the customer did omit that he did receive the item at an individually lower price by buying in bulk. This could satisfy prong 1, misrepresentation, especially if he actively withheld the reciept or did not point out something hinting that this was the full purchase or most of it. It is not material that the misrepresentation was accidental, only that it happened.

He might or might not have produceed the receipt, that part is unclear. OP only states that they can look at them, not that they produced them to the seller. In any way, due to the returned ammounts, plaintiff's agent reasonably might have believed that the items were bought at full price. This would satisfy prong 4, reasonable reliance on the representation of the accused.

The shop suffered suffered the discount they had given in damages, satisfying prong 5, damages.

Now, if it was fraud hinges on the prongs 2 and 3.

If he either knows it will result in too much payout or noticed it did result in too much payout (knowledge) and he wants to keep the extra money (intent), he's guilty of fraud. If he does not know it will overpay him, he is not fulfilling the requirements. So, because he did fix the error, there is no chance to prove intent to defraud and knowingly misrepresenting.

If there was neither knowledge, nor intent, there was no fraud.

So, now let's vary the case:

Variant 1: Fraud

Bob deliberately buys at discount, 'loses' the receipt and returns at full price, pocketing the discount: This is Fraud.

Variant 2: Fraud

Bob buys at a discount, returns for full price, asks the cashier about the difference, and, once told 'That's not correct, you were overpaid, let me call what to do', leaves the shop. The moment he was told about the discrepancy but still left with the money, it turned the accidental miscalculation on both sides into fraud or conversion, aka "civil theft".

Variant 3: possibly Fraud

Bob buys at a discount, returns for full price. He notices the mischarge (Knowledge) but instead of noting the discrepancy at the cashier, he leaves. Fraud is possible, though also conversion.

Variant 4: Not Fraud

Bob buys at a discount, returns for full price, and never notices the discrepancy. At best, this could be conversion as there is no intent to defraud. Conversion is also hard to proove, and relies on some form of intent to keep the money ton be proven once the discrepancy is noticed. The problem for the shop in that charge would be to prove that Bob did notice.

What is conversion?

Conversion is the 'tort sister' to theft. New York describes its test as:

The test for conversion is whether a party exercises dominion or actually interferes with the property to the exclusion or in defiance of the plaintiff's rights (Suzuki v Small, supra, p 557; Debobes v. Butterly, supra, p 54). Generally an allegation of an act of conversion is sufficient to maintain a cause of action in conversion except where a more specific statement is required because of an apparent inconsistency between the general allegation and the other facts stated (10 N.Y. Jur, Conversion, § 25, pp 520-521; see 5 Carmody-Wait 2d, N Y Prac, § 29:707, pp 198-199).

Meese v. Miller, 79 A.D.2d 237, 243 (N.Y. App. Div. 1981)