C.R.S. Section 4-4.5-205
Erroneous payment orders

(a)

If an accepted payment order was transmitted pursuant to a security procedure for the detection of error and the payment order (i) erroneously instructed payment to a beneficiary not intended by the sender, (ii) erroneously instructed payment in an amount greater than the amount intended by the sender, or (iii) was an erroneously transmitted duplicate of a payment order previously sent by the sender, the following rules apply:

(1)

If the sender proves that the sender or a person acting on behalf of the sender pursuant to section 4-4.5-206 complied with the security procedure and that the error would have been detected if the receiving bank had also complied, the sender is not obliged to pay the order to the extent stated in paragraphs (2) and (3) of this subsection (a).

(2)

If the funds transfer is completed on the basis of an erroneous payment order described in clause (i) or (iii) of subsection (a) of this section, the sender is not obliged to pay the order and the receiving bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.

(3)

If the funds transfer is completed on the basis of a payment order described in clause (ii) of subsection (a) of this section, the sender is not obliged to pay the order to the extent the amount received by the beneficiary is greater than the amount intended by the sender. In that case, the receiving bank is entitled to recover from the beneficiary the excess amount received to the extent allowed by the law governing mistake and restitution.

(b)

If (i) the sender of an erroneous payment order described in subsection (a) of this section is not obliged to pay all or part of the order, and (ii) the sender receives notification from the receiving bank that the order was accepted by the bank or that the sender’s account was debited with respect to the order, the sender has a duty to exercise ordinary care, on the basis of information available to the sender, to discover the error with respect to the order and to advise the bank of the relevant facts within a reasonable time, not exceeding ninety days, after the bank’s notification was received by the sender. If the bank proves that the sender failed to perform that duty, the sender is liable to the bank for the loss the bank proves it incurred as a result of the failure, but the liability of the sender may not exceed the amount of the sender’s order.

(c)

This section applies to amendments to payment orders to the same extent it applies to payment orders.

Source: Section 4-4.5-205 — Erroneous payment orders, https://leg.­colorado.­gov/sites/default/files/images/olls/crs2024-title-04.­pdf (accessed May 26, 2025).

4–4.5–101
Short title 4–4.5–102
Subject matter 4–4.5–103
Payment order - definitions 4–4.5–104
Funds transfer - definitions 4–4.5–105
Other definitions 4–4.5–106
Time payment order is received 4–4.5–107
Federal reserve regulations and operating circulars 4–4.5–108
Relationship to federal “Electronic Fund Transfer Act of 1978” 4–4.5–201
Security procedure 4–4.5–202
Authorized and verified payment orders 4–4.5–203
Unenforceability of certain verified payment orders 4–4.5–204
Refund of payment and duty of customer to report with respect to unauthorized payment order 4–4.5–205
Erroneous payment orders 4–4.5–206
Transmission of payment order through funds-transfer or other communication system 4–4.5–207
Misdescription of beneficiary 4–4.5–208
Misdescription of intermediary bank or beneficiary’s bank 4–4.5–209
Acceptance of payment order 4–4.5–210
Rejection of payment order 4–4.5–211
Cancellation and amendment of payment order 4–4.5–212
Liability and duty of receiving bank regarding unaccepted payment order 4–4.5–301
Execution and execution date 4–4.5–302
Obligations of receiving bank in execution of payment order 4–4.5–303
Erroneous execution of payment order 4–4.5–304
Duty of sender to report erroneously executed payment order 4–4.5–305
Liability for late or improper execution or failure to execute payment order 4–4.5–401
Payment date 4–4.5–402
Obligation of sender to pay receiving bank 4–4.5–403
Payment by sender to receiving bank 4–4.5–404
Obligation of beneficiary’s bank to pay and give notice to beneficiary 4–4.5–405
Payment by beneficiary’s bank to beneficiary 4–4.5–406
Payment by originator to beneficiary 4–4.5–501
Variation by agreement and effect of funds-transfer system rule 4–4.5–502
Creditor process served on receiving bank 4–4.5–503
Injunction or restraining order with respect to funds transfer 4–4.5–504
Order in which items and payment orders may be charged to account 4–4.5–505
Preclusions of objection to debit of customer’s account 4–4.5–506
Rate of interest 4–4.5–507
Choice of law

Current through Fall 2025

§ 4-4.5-205. Erroneous payment orders's source at colorado​.gov