Cybercrime – do your terms and conditions protect you?
Automatic push payment fraud is a growing problem where fraudsters deceive an individual or business to instruct their payment services provider, such as their bank, to send money to an account controlled by the fraudster. An increasingly common example is when a fraudster intercepts or replicates a genuine business email and instead inserts their own bank details.
The problem is widespread and growing. The Financial Conduct Authority reports that 12% of reported APP fraud cases in 2017 affected businesses, with each business losing a staggering average of £24,355 per case.
Courts have so far avoided finding in favour of victims of push payment fraud, although a growing weight of regulatory and public concern may start swinging the pendulum slightly towards consumers and small businesses. There has been some leniency in recent FCA changes which allow consumers to complain directly to the fraudster’s bank and question whether they did enough to prevent or respond to the APP. The standard for proving liability in these claims will likely be high. Consequently APP remains a real and prominent risk to businesses and consumers alike.
In these unfortunate cases, the payer is out of pocket and the provider has still not received the payment they are due. Who then, has liability for the push payment fraud and will the payer be stung with having to make a double payment?
The answer will be fact specific, depending on whose email system was compromised, what safeguards had been agreed and the type of relationship (certain professional, such as solicitors, having special additional duties).
Businesses can secure a more certain answer by tackling this emerging issue in their terms and conditions, allocating the risk and agreeing steps which must be taken to verify bank details before sending payment. The size of the potential losses means that the need for vigilance cannot be understated.
If you require professional assistance when it comes to creating your company’s terms and conditions, our team of expert commercial litigation solicitors are here to help. Contact Trethowans today on 0800 2800 421.