Catastrophic fraud loss lies where it falls? Push payment scams and the bank’s duty of care to its customer

Judith Dahlgreen

Journal of Financial Crime, 2021, vol. 30, issue 6, 1845-1852

Abstract: Purpose - This paper aims to examine the legal redress available to a UK bank customer who has been the victim of a sophisticated push payment scam which made use of the bank’s customer facing payment portal. Design/methodology/approach - A detailed study was done of the experience of a single UK bank customer who was the victim of a push payment scam in Autumn 2020. Her circumstances are typical of other customers who have been similarly scammed. Her rights of redress are explored in depth in relation to law and an industry code. Findings - The industry code provides no reliable means of adjudication and redress. The common law of negligence has not adapted to the technological shift in bank payment methods currently used by customers. The duty of care is inadequate in safeguarding customer interests in relation to payment instructions to banks. Customers are bearing the loss associated with inadequate bank transaction analytics. Originality/value - This research casts a unique light on the unbalanced relationship now existing between the bank and its customer in relation to the execution of remote payment instructions.

Keywords: Negligence; Fraud; Duty of care; Redress; Bank customer; Push payment scam; Money laundering; Bank and customer (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-10-2021-0223

DOI: 10.1108/JFC-10-2021-0223

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