Payment transfer on mobile phone symbolising push payment fraud

Victims of authorised push payment fraud may see assistance following Court of Appeal decision.

Authorised push payment fraud

In a recent case, the Court of Appeal held that a bank may owe a duty of care to a customer who falls victim to an authorised push payment fraud and unwittingly transfers funds to a fraudster.

In Philipp v Barclays Bank the original claim arose because Mrs Philipp had been tricked into instructing the bank to transfer large sums from her account to a fraudster.

She argued that the bank owed a duty of care that required it to have in place policies and procedures for the purpose of detecting and preventing fraud of this type (known as an authorised push payment fraud).

High Court decision

The bank applied for summary judgment in its favour and was successful in the High Court.

Central to the Court’s decision was its finding that the scope of a bank’s duty to protect its customers was limited to cases of attempted misappropriation of funds by an agent of the customer, such as an authorised signatory of a company account.

The Court did not consider that this duty extended to cases where the customer was an individual account holder who had instructed the bank to make the transfer of funds.

The Court of Appeal

Mrs Philipp successfully appealed the decision. The Court of Appeal decided that the duty of care is not limited to cases where the bank is instructed by an agent of the customer.

The duty can potentially arise in a case such as this, where the customer is a victim of an authorised push payment and personally instructs the bank to transfer the funds. The summary judgment in favour of the bank was therefore set aside.

What next for victims of push payment fraud

This isn’t necessarily the end of the case, which could go to a full trial involving a thorough examination of the facts as well as further legal argument.

If so, the Court will then need to consider and decide whether a duty of care did in fact arise in this case and, if it did, whether that duty was breached by the bank.

The decision of the Court of Appeal potentially opens the door for other victims of authorised push payment frauds, but it is important to note that each case will be considered on its particular facts.