Recent figures show that the amount of money illegally defrauded by criminals via online banking fraud and telephone scams continues to rise. According to UK Finance, the number of cases of online banking fraud rose by 12% to 232,429 in 2023, with losses totalling £459.7million.

How does online and telephone banking fraud occur?

Phone banking fraud, commonly known as ‘phishing’ often occurs when an individual is persuaded to transfer money from one bank account to another.

1. phone banking fraud
With decision systems, lenders can develop phone banking fraud: By telephone with the fraudster posing as a trusted third party and using social engineering to gain personal/financial information or attempting to convince the victim to move money (“vishing”); or

2. the fraudster intercepts and hijacks email traffic between two parties
This is know as a “man in the middle attack”. The fraudster will then usually facilitate the transfer of money to its account (when the victim thinks it is paying the legitimate original email contact) or encourages the victim to log onto a fake website which then asks the victim to enter personal/financial data or places malware onto the victim’s computer (“phishing”).

When the fraudster receives a sum of money, these are quickly transferred to third party beneficiary accounts and often across multiple jurisdictions.

Defrauded victims need to think fast and act quickly.

Practical steps to take after online or phone banking fraud

Listed on the next page is our ten-step guide to practical steps, which you should take immediately on discovery of any suspect transactions:

1. Contact your bank immediately to inform it of what has happened. Confirm the bank account number which the monies have been sent to and to request that an indemnity be issued to the beneficiary account via “Share Point”. Your bank might be able to stop the transaction from going ahead or recover funds from the fraudster’s account.
2. Contact the beneficiary bank account where your money was sent and let it know the account number and any relevant information about the scam.
3. Contact experienced legal representatives for urgent legal advice who can assist in freezing bank accounts via injunctive relief and trace funds through the civil courts by issuing an application(s) for a Norwich Pharmacal Order(s).
4. Report the crime to the police through Action Fraud (0300 123 2040).
5. Where litigation is contemplated/a possibility, it is essential that the relevant documentation is preserved and stop any electronic (and other) routine document destruction. Keep a record of any conversation/correspondence you/your employees may have had with the fraudsters whilst the details are fresh in your mind.
6. Contact your insurer to see if you have policy cover for loss as a result of online banking fraud.
7. If funds have been taken from a company account, undertake a thorough internal review of policy, practice and investigate any employees who may have been involved with the transfer of funds.
8. From 7 October 2024, Payment Service Providers (PSP) (including all major banks) are required to refund frauds worth up to £85,000 under the Authorised Push Payment (APP) fraud mandatory reimbursement rules. All UK personal customers and in scope business customers who have sent money via an APP (e.g. the Faster Payments system or CHAPS) will be fully reimbursed if they are the victim of an APP scam and have met the required level of care.The rules will cover the vast majority of UK money transfers up to £85,000, with the exception of international transfers or those involving cryptocurrencies. Refunds will be split 50-50 between sending and receiving firms. The Payment Systems Regulator (PSR ) has stated that the mandatory reimbursement limit of £85,000 will cover 99% of claims. The PSR will formally review the effectiveness of this cap after 12 months.Any refund must be paid within five days. Once a bank or PSP has provided a refund, it can claim half back from the financial institution the fraudster used to receive the stolen money.
9. In certain circumstances, make a formal complaint to your bank/escalate your complaint to the Financial Ombudsman Service.
10. To prevent recurrence, obtain relevant fraud training via your bank and enforce best practice in your domestic/business environment.