What is Push Payment Fraud?

So what is Push Payment Fraud?

Push Payment fraud takes place when a victim transfers money from their own bank account to an account of which they are tricked into believing is a genuine recipient, but which is actually the account of the fraudster. The fraudster then quickly transfers the received funds elsewhere, usually to numerous other accounts and often abroad, making recovery very difficult, and often impossible.

Whilst none of us think we will fall for such scams, it is important to appreciate that the fraudsters have done their homework. They will often have researched their targets first, using information they have gathered through social media, data breaches and sometimes malware, to add plausibility to their scam. For example, this may take the form of a simple reference by the fraudster to a victim’s colleague in the technical team. While this provides credibility, such information could have been obtained readily from the company’s website or from a disclosure by the company’s receptionist. The tactics employed by fraudsters are not always obvious.

During the recent pandemic many fraudsters have taken advantage of staff working from home on networks that are not as secure as commercial ones.

How do I get my stolen money back?

When an APP fraud takes place you are tricked into authorising the payments (albeit without appreciation of the full facts) the payments are not treated by your bank as unauthorised transactions. As a result, entitlement to recovery of the funds from your bank is more limited.

On 28 May 2019 UK Finance launched the Contingent Reimbursement Model Code for Authorised Push Payment Scams (‘Code’). This voluntary code (and to which the majority of the ‘big name’ banks have signed up) ensures that many victims of APP scams are reimbursed in full by their bank, provided that the victim has not acted with ‘gross negligence’ in making the payment. The Code applies to all personal customers and micro enterprises (an enterprise which employs fewer than 10 people and whose annual turnover and annual balance sheet total does not exceed €2m).

However, it is worth noting that any entitlement to any reimbursement under the Code will cover only the stolen funds and not any consequential loss claimed (for example, lost profits from a transaction for which the funds would otherwise have been used). For victims who fall outside the scope of the Code, seeking reimbursement of stolen funds from their bank can be more difficult.

Therefore, as a first step, you should liaise with your bank or building society to establish whether it has signed up to the Code and/or whether it is prepared to compensate you for the losses that you have suffered as a direct result of the fraud.

However, sadly, and despite the spirit of the Code, many banks have been quick to refuse claims made by victims who have suffered from APP fraud. This is often on the basis that the victim acted (allegedly) with gross negligence in authorising the payment or falls outside the scope of the Code, thus entitling the bank to refuse to reimburse under the Code.

What is ‘gross negligence’ and am I guilty of it?

There is no statutory definition of ‘gross negligence’ and, as yet, the Courts of England and Wales have not sought to carve out a clear definition either. This means that not only is there a greater level of uncertainty for both the bank and the victim, but also that the interpretation of what amounts to gross negligence often turns on the specific facts of a case.

Examples of gross negligence may include:

• Giving the fraudster the ‘code’ required to effect online payments from your bank account, despite repeated warnings by your bank never to disclose the code to anyone, including to bank employees.
• Failing to install appropriate virus/anti malware software to your computer systems which has enabled the fraudster to access information which would not otherwise be available but which has been fundamental to the carrying out of the fraud. This is particularly the case where a bank recommends installation of its own specially designed and free of charge antivirus software.
• Giving the fraudster remote access to your computer systems via software such as TeamViewer.

Regardless each case must be considered on its own facts and merits. This also means that any decision by a bank to refuse to reimburse the stolen funds on this basis should be scrutinised all the more closely and potentially makes it all the more susceptible to challenge.

Push Payment Fraud Compensation Claims

If your bank has rejected your request for reimbursement of the stolen funds, it may still be possible to successfully claim compensation from your bank for the losses that you have suffered as a victim of Push Payment Fraud.

Whilst a bank does not have a blanket duty to prevent fraud, it does owe a duty to safeguard its customers from fraud and to exercise reasonable skill and care in that regard. This common law duty is in addition to, and distinct from, any obligations that a bank may have assumed under the Code. Consequently, and once it is ‘put on inquiry’ of fraud, it may be reasonable to expect a bank to stop fraudulent payments from being made, even when they have been authorised by the victim.

A bank is likely to be ‘put on inquiry’ where there are reasonable grounds for believing that a fraud may be taking place. This does not necessarily mean that the bank has to have absolute proof that a fraud is in progress. If, despite those reasonable grounds for suspicion, the bank nevertheless facilitates a payment then there may well be an argument that the bank has breached the duty of care that it owed to the victim and is thus liable to pay compensation, by reimbursing the stolen funds.

Whether or not a bank has breached the duty of care it owes to its customers again turns on the specific facts of a case. However, examples of when a payment might be successfully challenged include:

• Payments made which are atypical of the victim’s usual banking, such as significant payments made to suppliers when usually payments made are much lower in value.
• Payments made from otherwise dormant accounts.
• Payments to foreign accounts when the victim’s business is entirely UK based.

Can we help?

Evans Hughes make starting your Push Payment claim easy. We have a team of experts who are on hand to talk you through the process. There is no obligation to use our service after we have performed our initial checks, and none of the checks will affect your credit score.

If you are one of the thousands in the UK that might have been affected by Push Payment Fraud, contact one of the Evans Hughes team today and we will be in touch to talk you through the next steps.

There are no up front costs, and any payments to us will simply be deducted from your compensation award should your claim be successful.