On the hook – Who pays when customers are scammed

Fuelled by the Covid-19 pandemic and increasing digital transformation of many industries, online fraud and scams are a growing problem throughout the world. For context, the UK alone reported over £1.2 billion being lost to fraud in 2022 and the banking and finance industry prevented a further £1.2 billion getting into the hands of criminals. Of that £1.2 billion in fraud, £485.2 million was attributed to authorised push payment (APP) fraud – where individuals are deceived into sending money under false pretences – the most prevalent being purchase scams and investment scams.

Banks are often unwitting facilitators of fraud, effecting the transfer of funds from victims to criminals. This has led to a growing body of case law where victims have attempted to recover lost funds from banks – with mixed results. Regulators have long seen the bank’s role as pivotal in combatting scams, and banks have a strong incentive to dedicate time and resources to address the issue.

A key Supreme Court ruling and an evolving regulatory landscape could provide some answers. We discuss our global insights in our recent article: On the hook – Who pays when customers are scammed.

This article is part of our Global Bank Review 2023: Trust Matters.