https://www.thetimes.co.uk/edition/m...-too-9hpvjb3xp
I fought fraud in court. Now I’m paying the costs, too
The bank providing an account used in a £74,000 scam has ‘no duty of care’ towards its victimAli Hussain
September 1 2019, 12:01am, The Sunday Times Agi Gamski’s construction business fell foul of a bank transfer fraud, but neither of the banks involved accept liability
When Agi Gamski lost £74,000 to fraud, she sought justice. What she got instead was a £24,000 bill, after a High Court judge ruled she had no real prospect of winning her case against Metro — the high street bank that was used by the fraudster to receive her stolen funds.
Agi said that Metro Bank failed to flag suspicious activity in the fraudster’s account and failed to carry out adequate checks before the account was opened. However, Metro successfully argued that neither point was true. Nor did it owe Agi a duty of care, because neither she nor her business, from which the money was transferred, are its customers.
Instead, the bank’s duty was to protect its account holder — a 32-year-old Bangladeshi national who entered Britain with a temporary student visa allowing him to work for only 20 hours a week.
The bank has refused to disclose the full details of how this account was used prior to the fraud in June 2017. It had been opened a little over a year before £73,759 was transferred to it from Agi’s small construction business. Before that transfer, it had a balance of just £161.32.
The student visa had expired by the time the fraud occurred, although Metro Bank would not confirm the legal status of its customer at that time.
Court documents do, however, reveal the extraordinary way in which the account was cleared after the fraudulent transfer — over six days and 22 transactions. These included five electronic “faster payments” totalling almost £33,000 in just one day; trips using the taxi service Uber; cash withdrawals; and £312 spent at a perfume shop.
Substantial payments were also made to what appear to be colleges teaching English in Tower Hamlets, east London.
None of this raised enough suspicion at the bank to block the payments. By the time Metro was informed of the fraud, there was £1.75 left in the account. It was closed eight days later.
Agi, 47, of Claygate in Surrey, could not take her case to the Financial Ombudsman Service as she was not a customer of the bank. (Since January, the ombudsman has been able to examine complaints against a bank that has received stolen funds, but this does not apply retrospectively.)
She was also excluded from the small claims courts, where she would be liable only for her costs if she lost the case. That is because these courts only deal with claims of £10,000 or less. So she turned to the High Court instead — but last month a judge dismissed the case, making her business, MJC, liable for both its costs and those of Metro. This will be at least £24,000, with other costs yet to be agreed. Agi plans to appeal.
Her case shows how banks that inadvertently enable fraud are not held responsible, and how courts can work against the victims of larger-scale scams.
The police also routinely fail to investigate these cases properly, closing Agi’s case months before the latest court hearing because they were unable to link the account holder with the fraud, or prove that he had control over the account at the time the crime was committed.
Metro points out that the fraud occurred against Agi’s business, not her as an individual. It said the case was brought by MJC and not by Agi personally, so it is incorrect to say the court found against her or that Agi is personally a victim.
Metro said it did not provide all of its customer’s transaction details because it owed him a duty of care, and the court did not order it to do so. It said it would be a worrying development if banks were obliged to provide transaction details of customers in such cases.
Metro argues MJC was a victim of fraud through unlawful access of either its own systems or the systems of the supplier with which it was dealing.
Money first highlighted Agi’s case in October last year, after she was told by police that the documents used to open the Metro account may have been fake. The police were unable to verify this in their official report.
Metro denies the documents were fake, and says multiple sources were used to validate the identity of its customer and the paperwork he used.
Agi says she feels let down by the banks, the police and the courts. She said: “Metro Bank is the only party that has all the details needed to fight my case, yet it is allowed to keep them hidden. Had it not, my case would have been much stronger with more evidence.”
Fraud losses have been soaring as banks fail to keep up with increasingly sophisticated scams. About £1m a day is lost when people are tricked into transferring funds to a criminal’s account.
A victim’s bank has to follow its customer’s instructions. This is why NatWest, which provided the business account used by MJC to transfer funds to Metro, would not accept liability.
The focus has recently shifted to banks that allow fraudsters to receive funds. Money-laundering rules oblige banks to know the identity of their customers.
Losses from application fraud, where a criminal uses stolen or fake documents to open an account, rose by 159% to £29.4m last year, according to official statistics.
In a statement, Metro Bank said: “We take our customers’ security extremely seriously and have a range of safeguards in place to help defend them against fraud, which we constantly review and update in light of increasingly sophisticated tactics from fraudsters. We investigate each claim that is referred to the bank and our decisions are based on the merits of each individual case. We continue to work closely with other stakeholders, including banks, network operators and law enforcement agencies, to protect customers from these crimes.”
How the fraud happened
According to court documents, in July 2017 Agi’s construction firm, MJC, received a letter purporting to be from a known supplier advising of its new bank details. Around this time, MJC also received copies of invoices by email with the same bank details. On July 6, MJC transferred £73,759.20 to the Metro Bank account identified in the letters and emails. The account in question, however, was not the supplier’s but that of a 32-year-old man based in Leyton, east London. He had set it up in April 2016 after providing a Bangladeshi passport and a visa entitling him to remain in the UK until late 2016.
On July 12, MJC became aware of the fraud and informed its bank, NatWest. By then there was £1.75 left in the account, which was closed eight days later.
The expert view
Richard Emery, a leading fraud consultant who has advised MPs and the ombudsman, said Agi’s case highlights how the legal system “is not providing justice for all people”.
Emery, who has helped more than 40 victims of fraud, also claims senior managers at Metro showed a “serious lack of understanding of the regulations” when he was helping victims last year.
While other banks repaid victims following his assistance, he was pursuing four complaints against Metro. After being contacted by Money last week, the bank reviewed the four cases and offered refunds.
Last year, Emery tested the bank’s account-opening procedure. He was shocked to find he was successful despite providing details that were not “100% accurate”, he claims.
“When challenged, [Metro] responded by claiming it had validated the details I gave by reference to other sources, but declined to reveal those sources,” he said. “I assert that what they say they did is simply not possible.
“We will not reduce the enormous financial and personal cost of bank fraud until the banks develop and implement a range of new systems and processes in response to known risks.”
Metro Bank said: “We have taken the opportunity to undertake a further review of the cases [brought to us by Emery] as we always want to do the right thing for our customers.”
The bank said it complies with all the regulations for opening an account, going “above and beyond” requirements.
I fought fraud in court. Now I’m paying the costs, too
The bank providing an account used in a £74,000 scam has ‘no duty of care’ towards its victimAli Hussain
September 1 2019, 12:01am, The Sunday Times Agi Gamski’s construction business fell foul of a bank transfer fraud, but neither of the banks involved accept liability
When Agi Gamski lost £74,000 to fraud, she sought justice. What she got instead was a £24,000 bill, after a High Court judge ruled she had no real prospect of winning her case against Metro — the high street bank that was used by the fraudster to receive her stolen funds.
Agi said that Metro Bank failed to flag suspicious activity in the fraudster’s account and failed to carry out adequate checks before the account was opened. However, Metro successfully argued that neither point was true. Nor did it owe Agi a duty of care, because neither she nor her business, from which the money was transferred, are its customers.
Instead, the bank’s duty was to protect its account holder — a 32-year-old Bangladeshi national who entered Britain with a temporary student visa allowing him to work for only 20 hours a week.
The bank has refused to disclose the full details of how this account was used prior to the fraud in June 2017. It had been opened a little over a year before £73,759 was transferred to it from Agi’s small construction business. Before that transfer, it had a balance of just £161.32.
The student visa had expired by the time the fraud occurred, although Metro Bank would not confirm the legal status of its customer at that time.
Court documents do, however, reveal the extraordinary way in which the account was cleared after the fraudulent transfer — over six days and 22 transactions. These included five electronic “faster payments” totalling almost £33,000 in just one day; trips using the taxi service Uber; cash withdrawals; and £312 spent at a perfume shop.
Substantial payments were also made to what appear to be colleges teaching English in Tower Hamlets, east London.
None of this raised enough suspicion at the bank to block the payments. By the time Metro was informed of the fraud, there was £1.75 left in the account. It was closed eight days later.
Agi, 47, of Claygate in Surrey, could not take her case to the Financial Ombudsman Service as she was not a customer of the bank. (Since January, the ombudsman has been able to examine complaints against a bank that has received stolen funds, but this does not apply retrospectively.)
She was also excluded from the small claims courts, where she would be liable only for her costs if she lost the case. That is because these courts only deal with claims of £10,000 or less. So she turned to the High Court instead — but last month a judge dismissed the case, making her business, MJC, liable for both its costs and those of Metro. This will be at least £24,000, with other costs yet to be agreed. Agi plans to appeal.
Her case shows how banks that inadvertently enable fraud are not held responsible, and how courts can work against the victims of larger-scale scams.
The police also routinely fail to investigate these cases properly, closing Agi’s case months before the latest court hearing because they were unable to link the account holder with the fraud, or prove that he had control over the account at the time the crime was committed.
Metro points out that the fraud occurred against Agi’s business, not her as an individual. It said the case was brought by MJC and not by Agi personally, so it is incorrect to say the court found against her or that Agi is personally a victim.
Metro said it did not provide all of its customer’s transaction details because it owed him a duty of care, and the court did not order it to do so. It said it would be a worrying development if banks were obliged to provide transaction details of customers in such cases.
Metro argues MJC was a victim of fraud through unlawful access of either its own systems or the systems of the supplier with which it was dealing.
Money first highlighted Agi’s case in October last year, after she was told by police that the documents used to open the Metro account may have been fake. The police were unable to verify this in their official report.
Metro denies the documents were fake, and says multiple sources were used to validate the identity of its customer and the paperwork he used.
Agi says she feels let down by the banks, the police and the courts. She said: “Metro Bank is the only party that has all the details needed to fight my case, yet it is allowed to keep them hidden. Had it not, my case would have been much stronger with more evidence.”
Fraud losses have been soaring as banks fail to keep up with increasingly sophisticated scams. About £1m a day is lost when people are tricked into transferring funds to a criminal’s account.
A victim’s bank has to follow its customer’s instructions. This is why NatWest, which provided the business account used by MJC to transfer funds to Metro, would not accept liability.
The focus has recently shifted to banks that allow fraudsters to receive funds. Money-laundering rules oblige banks to know the identity of their customers.
Losses from application fraud, where a criminal uses stolen or fake documents to open an account, rose by 159% to £29.4m last year, according to official statistics.
In a statement, Metro Bank said: “We take our customers’ security extremely seriously and have a range of safeguards in place to help defend them against fraud, which we constantly review and update in light of increasingly sophisticated tactics from fraudsters. We investigate each claim that is referred to the bank and our decisions are based on the merits of each individual case. We continue to work closely with other stakeholders, including banks, network operators and law enforcement agencies, to protect customers from these crimes.”
How the fraud happened
According to court documents, in July 2017 Agi’s construction firm, MJC, received a letter purporting to be from a known supplier advising of its new bank details. Around this time, MJC also received copies of invoices by email with the same bank details. On July 6, MJC transferred £73,759.20 to the Metro Bank account identified in the letters and emails. The account in question, however, was not the supplier’s but that of a 32-year-old man based in Leyton, east London. He had set it up in April 2016 after providing a Bangladeshi passport and a visa entitling him to remain in the UK until late 2016.
On July 12, MJC became aware of the fraud and informed its bank, NatWest. By then there was £1.75 left in the account, which was closed eight days later.
The expert view
Richard Emery, a leading fraud consultant who has advised MPs and the ombudsman, said Agi’s case highlights how the legal system “is not providing justice for all people”.
Emery, who has helped more than 40 victims of fraud, also claims senior managers at Metro showed a “serious lack of understanding of the regulations” when he was helping victims last year.
While other banks repaid victims following his assistance, he was pursuing four complaints against Metro. After being contacted by Money last week, the bank reviewed the four cases and offered refunds.
Last year, Emery tested the bank’s account-opening procedure. He was shocked to find he was successful despite providing details that were not “100% accurate”, he claims.
“When challenged, [Metro] responded by claiming it had validated the details I gave by reference to other sources, but declined to reveal those sources,” he said. “I assert that what they say they did is simply not possible.
“We will not reduce the enormous financial and personal cost of bank fraud until the banks develop and implement a range of new systems and processes in response to known risks.”
Metro Bank said: “We have taken the opportunity to undertake a further review of the cases [brought to us by Emery] as we always want to do the right thing for our customers.”
The bank said it complies with all the regulations for opening an account, going “above and beyond” requirements.
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