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Compensation for HSBC customer following intercept APP scam

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An HSBC business customer was refunded over €30,000
lost as a result of a sophisticated invoice intercept scam.

The Financial Ombudsman Service (FOS), an independent Government body responsible for settling disputes between UK banks and their customers, recently investigated a claim by a business customer of HSBC, Company C. Company C lost €32,649 in an invoice intercept scam and claimed that HSBC should have done more to detect and prevent the fraud from happening in the first place.

Invoice intercept scams

Whilst Company C, an importer of goods into the UK, was engaging in an email conversation with an overseas seller it received a proforma invoice, including payment instructions, to the value of €32,649 from a very similar email address to the one it had been in contact with.

As Company C was already in communication with the seller and believed the proforma sent from the new email address to be legitimate, the payment was made. Unfortunately, the spoof email was set up by a scammer who intercepted the exchange between Company C and the legitimate overseas seller, sending a proforma invoice with the scammers’ own details, and the payment never reached its intended recipient.

Once the scam was uncovered, Company C reported it to HSBC, which refused to reimburse the loss as Company C had approved the transaction. Company C did not agree with the bank’s refusal to provide a refund and believed that it should have done more to detect and prevent the transaction, including blocking the payment while further checks were carried out, such as confirming the transaction details with the overseas seller by phone.

As a result of the bank’s refusal to provide a refund, the dispute was taken to the FOS. Following their independent investigation into the matter, the FOS found in favour of Company C, ordering HSBC to refund the company in full, together with 8% interest.

In its findings, the FOS agreed that HSBC had not taken sufficient steps expected of banks to detect and prevent the fraud, including:

  • Monitoring customer accounts to counter risks.
  • Having systems in place to identify unusual transactions or other indicators that customers are at risk of fraud.
  • Making additional checks and/or declining processing payments to protect consumers from harm.
  • Being more aware of common invoice intercept scam tactics.

The FOS investigation found that the payment in question, over €32,000, was more than 300% higher than the business’ regular payments and that this figure, combined with the fact that the payment was to a new payee, should have been red flags for the bank.

Company C’s invoice intercept scam is just one of the thousands of Authorised Push Payment (APP) scams that have seen an unfortunate rise in recent years. APP fraud involves scammers using social engineering techniques to manipulate unsuspecting individuals into transferring, sometimes substantial, funds to accounts that are controlled by the scammers.

Types of APP fraud include investment scams, romance scams, cryptocurrency scams and impersonation scams, and in most cases, once the victim has transferred funds to the fraudster, the money is swiftly moved on and becomes virtually impossible to recover.

If you are a business owner or individual who has been the victim of an APP fraud scam you should follow these steps to report it:

  1. Report the scam to the police and Action Fraud, the National Fraud and Cyber Crime Reporting Centre.
  2. Report the scam to your bank.
  3. If your bank refuses to provide a refund, and you believe there is more it could have done to prevent the scam from happening, the claim can be taken to the Financial Ombudsman Service.

Head of Professional Negligence at TLW, Sarah Spruce, commented on this latest decision from the FOS:

“It is encouraging to see the FOS find in favour of businesses, as well as individuals, such as in the case of Company C. The criminals involved in these sorts of intercept scams are using sophisticated spoofing tactics to convince victims that they are making a genuine business transaction.

As highlighted in the Ombudsman’s decision, banks and financial institutions are aware of the expectations of them to protect and safeguard customers from APP scams, so it is unsurprising that we are seeing an increase in FOS findings against them.”

If you are an individual or business owner that has been the victim of a scam, the specialist Authorised Push Payment (APP) Fraud team at TLW Solicitors can help you make a compensation claim to recover your losses. We understand the processes involved and the time limits to be followed. We have robust case management systems meaning that we keep progressing with your case and keep you fully up to date.

We work on a ‘no-win, no-fee’ basis meaning that, if your case is unsuccessful, we will not charge for the time we have spent.

If you or your business has been conned into making payments to fraudsters, please get in touch for a confidential, no-obligation discussion.

You can call us on 0800 169 5925, email info@tlwsolicitors.co.uk or complete one of the online forms below.

It is important to get advice as soon as possible as strict time limits can apply.

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