APP Fraud update

APP (Authorised Push Payment) fraud is back in the headlines for reasons that may come as a surprise to many lenders and may give a glimmer of hope to potential victims.

In simple terms APP fraud occurs where a customer of say a bank is deceived by a fraudster to instruct their bank to make a transfer to the fraudsters account.

The issue of the bank’s liability is far from straightforward. A case last year highlighted the limits of a bank’s liability, see our article.

https://www.se-law.co.uk/is-your-bank-liable-if-you-are-victim-of-app-fraud/

In this case Mrs Philipp was stuck out last year, she appealed to the Court of Appeal and last week was successful in having her case reinstated.

In very simple terms one of the key issues was whether on the specific facts the bank were on notice of the potential fraud and what steps they should have taken. The Court of Appeal noted that the law does require a bank to observe the standards of what an ordinary prudent banker would do if they knew that a customer’s instructions may have been the result of fraud. 

Each case is very fact specific and the Court of Appeal’s decision in this case may not be as wide ranging as first appears. What it does signal is that bank’s duties to customers to use reasonable care and skill has to be seen in the context of current banking practice. 

SE-Solicitors’ specialist banking and finance team are here to help and can advise on issue of APP fraud.

What policies and procedures banks in fact would have had in place in March 2018 is a question of fact to be decided on the evidence, not a matter of law. For the sake of argument, if it was established that in fact ordinary prudent bankers did have such policies and procedures in place in March 2018, that would tend to undermine the finding by the judge that such activity was unworkable.

https://www.bailii.org/ew/cases/EWCA/Civ/2022/318.html