Barclays Bank has successfully overturned an appeals court ruling that could have made it liable for a £700,000 authorised push payment (APP) scam involving one of its customers.
The case was brought by Barclays customer Fiona Philipp, who accused the bank of failing in its duty of care by transferring funds to scammers located in the United Arab Emirates. Philipp’s arguments focused on whether the bank had sufficient reason to suspect that the transfers were fraudulent.
Barclays appealed to the UK Supreme Court, which unanimously ruled in favor of the bank. In the written judgment, Judge George Leggatt stated, “Where the customer has authorised and instructed the bank to make a payment, the bank must carry out the instruction promptly. It is not for the bank to concern itself with the wisdom or risks of its customer’s payment decisions.”
This ruling is significant as UK banks have faced criticism for their handling of APP fraud, where customers are deceived into authorising payments to fraudsters. APP fraud has rapidly become one of the most prevalent forms of fraud in the UK, with losses nearing £500 million in the past year.
Consumer advocates and politicians have increasingly urged banks to address what is seen as a growing crisis and to expedite reimbursement for innocent victims.
New regulations are set to be implemented next year, requiring both sending and receiving banks involved in transactions through the UK’s Faster Payments scheme to share the costs of reimbursements in APP fraud cases. However, the Payment Systems Regulator has yet to clarify the standards of customer caution (gross negligence) and the legal measures necessary to enforce the new framework.