Fighting back against APP fraud

APP scams occur when someone is deceived into authorising a payment to an account that they believe belongs to a legitimate person or company. Most commonly, fraudsters gain access to an individual’s information and then present themselves as a company with whom the hacked account owner is already doing business.

Hackers are known to sit passively for weeks, monitoring property transactions before swooping at the exact moment that a customer expects a payment to be made – a deposit on a house purchase or a one-off mortgage payment are common examples.

We are also seeing a worrying trend of commercial property and sophisticated investors being targeted. Payments are made by immediate bank transfer which cannot then be reversed.

The first step is prevention. Clients should take care to safeguard themselves; this might include calling the intended payee before making payment to check bank details or checking for any irregularities in correspondence with the intended payee.

Similarly, businesses should take extra steps to warn clients of the increased risk of APP fraud. Particular care should be taken if emails are being read on mobile devices, where it is not always possible to see that emails are coming from an unexpected source.

To get their money back, clients should call their bank as soon as they think they have been scammed. Most banks have signed up to a voluntary code known as the Authorised Push Payment Scam Voluntary Code, which provides protection for customers by committing banks to reimburse customers in certain circumstances.

A formal complaint can also be made to the bank, and if your client is not satisfied with the outcome of their complaint, the next option is to ask the Financial Ombudsman Service to look into it.

Finally, was someone else negligent? Clients may be able to recover some money from that party or their insurer.

Dan Dodman is a partner inthe disputes resolution team at Goodman Derrick