The latest figures released by UK Finance show that a total of £503.4 million was stolen by criminals through authorised and unauthorised fraud in the first six months of 2018. Further details were also provided on authorised push payment (APP) scams which show that a total of £145.4 million was lost due to APP scams, split between personal (£92.9 million) and non-personal or business (£52.5 million) accounts. In an APP scam, the account holder is tricked into authorising a payment to be made to another account.
As detailed by UK Finance, if a customer authorises the payment themselves, current legislation means that they have no legal protection to cover them for losses. The Payment System Regulator has previously confirmed plans to protect victims of payment scams and published a summary of the initiatives in place which includes a best practice standard for banks to follow when a victim reports an APP scam and more effective data sharing between payment service providers.
Mehmet Karagoz, Managing Associate in Fraud Defence says:
“Fraud continues to cause loss to tens of thousands of individuals and businesses in the UK resulting in hundreds of millions of pounds of financial losses. Unfortunately, this is likely to be the tip of the iceberg, there are likely to be many more frauds which have not yet been uncovered or which go unreported. I also expect the level of fraud losses to continue to increase in light of the ease in which money and assets could be transferred at the click of a button. I hope that the proposed changes, which are yet to be implemented by payment service providers, allowing a customer to confirm and verify the payee before making payment will assist in preventing obvious scams. The industry code clarifying the circumstances in which the victims of APP will be reimbursed by their payment providers will also assist in providing redress to some victims of fraud.“
Claire Broadbelt, Partner in Fraud Defence says:
“It is essential that victims of fraud move quickly if they discover they have been tricked into making a payment. They should inform their bank immediately to try and freeze and reverse the transaction, if possible. If the bank is unable to help, liaising with a specialist fraud solicitor as soon as possible could make a huge difference in being able to recover the funds. A specialist can advise on making an application for a disclosure order against the recipient bank to ascertain the identity of the bank account holder and potentially apply to freeze the funds in the account and request provision of the onward tracing account details In our experience, taking civil action to follow and freeze funds often has a greater chance in recovering losses for victims of fraud than simply reporting to the bank or the police.“