Banks not liable for push fraud

Up until recently if you were subject to fraud there were many occasions on which you might be able to make a claim against your bank for your losses on the grounds that the bank should have stopped the payment if it appeared suspicious. Not surprisingly the banks have been very unhappy about this state of affairs, feeling that they were often made scapegoats when a customer had been unduly gullible. In the circumstances they have been pushing back against this, introducing more and more mechanisms to try and spot and block fraudulent payments and fighting what they regarded as unreasonable claims.

In a recent case Barclays managed to defeat a claim for push fraud, the circumstances were perhaps a little extreme, the sum of money was some £700,000 and the customers had refused to accept advice against the transfer. But in the past the Banks have been made to compensate customers in similar circumstances, so this was potentially a big win for Barclays.

So what is push fraud?

This is when you, the customer, are persuaded to pay money from your account into the account of the fraudster, never to be seen again. In other words it is the customer who makes the transaction. The Barclays case above was a version of push fraud called a “protect scam” which is one when the customer is approached by a fraudster who typically pretends to be from the police, your bank’s fraud department or the National Crime agency. You are informed that your bank account has in some way been compromised and in order to protect your funds you must transfer them to a new secure account, needless to say the account is not secure, rather it belongs to the fraudster.

There are other forms of push fraud, another common one is the fantastic and slightly secret new investment scheme guaranteed to offer you a return of 8-10%. These sorts of frauds have sadly often been attached to pension frauds where you are persuaded to use the pension freedoms to cash in your pension to switch for a better return elsewhere, sadly the better return can often include a painful income tax bill arising from cashing in the pension followed by the disappearance of your funds.

The point with push fraud and the point that came through from the Barclays case is that it was the customer who actually made the payment.

The message from this is that there is an ever greater need for vigilance whenever you chose to make any payments to a third party.

Also it is worthwhile remembering the other principal source of fraud namely what is called “Phishing”. Phishing is where you are persuaded to give away valuable information about yourself or your finances which may enable a fraudster to extract money from your bank account or make payments using your credit card, or to enable them to assemble the information which may then be used to help them in a push fraud.

Given this, it is perhaps worthwhile reminding people of the basic precautions you need to take.

  1. If your bank picks up what it thinks might be a fraudulent transaction on your credit card or bank account, it will usually block the transaction and contact you to verify the transaction before allowing it to go ahead. This will usually be by Text and/or Email but may also be by telephone. If the bank thinks that your password or PIN has been compromised, they will probably tell you to change your password or PIN but they will NEVER ask you for your PIN or Password. If someone ask you for your PIN or Password irrespective of who they say they are DO NOT GIVE IT TO THEM, hang up.
  2. If you are ever contacted by someone claiming to be your bank, the police or a fraud department make a note of what they say and tell them that you need to verify who they are. A real bank will raise no objection to this, a fraudster may. Either way telephone your bank’s fraud department, the telephone number is on you Bank card, DO NOT use the phone that you were originally contacted on, the fraudster may keep the line open and your call to the fraud department will in fact be a call back to the fraudster. Use a different phone, if need be ask your neighbour if you can borrow their phone.
  3. If you ever receive an unexpected Bill or demand for payment, particularly if you receive it by email or via a call to your mobile phone assume that it is fraudulent until you are sure it is not. Consider telephoning the organisation that sent you the bill, do not use the telephone number shown on the bill, if it is a fraudster that will be his number. With email check the email address of the sender, for example HMRC would not email you from a Hotmail account, nor would they email you from an email account based in Russia.
  4. Equally if you receive an email notice of some wonderful bonus, two common examples are the fact that you are due a refund from HMRC, or that a long lost relative has died in Singapore and that you are due to receive an inheritance of half a million dollars (these scams are commonly denominated in US$ rather than £) then it is probably too good to be true. HMRC will not contact you by email or via a recorded phone message. These scams can often look very realistic, we have seen examples of the inheritance scam which have apparently come from Herrington Carmichael, but a little bit of research has shown that the phone numbers given or the originating email address are not ours.
  5. If you are ever offered an investment opportunity that sounds awfully good then the chances are that something is wrong with it. Do some research, look on the internet to see if you can find out anything about the proposed investment, if it is genuine it is likely that there will be a number of analysis reports, consider speaking to a financial adviser unconnected with the person trying to sell you this investment or contact the Financial Conduct Authority. Bear in mind that if the seller tries to tell you that the idea is secret or not available other than to specially selected individuals such as yourself the chances are that it is a fraud.
  6. Beware that quite often the scammer may already have personal information about you, sometimes this can include such things are bank account details, birthdays etc, sadly this information is not as private as you think, often making it easier to claim that he or she is from your bank or the police.

One thing that stands out about almost all the scams is that the fraudsters will usually prey on one or other of two fairly basic human instincts, fear and greed. Before you pay anyone or give out any important information. STOP AND THINK. Is there any chance that this could be a fraud?

If you require any further information, please feel free to contact Anthony directly at or on 01276 854 947. Alternatively, please use the contact form below. 

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to your own particular matter before action is taken.

Graeme Black
Partner, Private Wealth & Inheritance
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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