As fraud continues to cost the UK economy billions each year, bank customers are now looking to the banks to cover their losses. What steps should banks take to defend themselves against such claims?

Online banking fraud continues apace with the targeting of instantaneous online payment systems offered by all banks, which provide businesses with a swift and efficient payment capability. Common scams include ‘vishing’ telephone calls, where customers are deceived into providing online banking security details, and viruses using harmful software to gather those details. With this information, the fraudster effectively has a signed blank cheque against all the customer’s online accounts and can misappropriate thousands — if not tens or hundreds of thousands — in a short space of time.

From the bank’s point of view, these frauds often pass under the radar because, by virtue of the security information the fraudster has garnered, the bank has no way of knowing that it is not the customer undertaking the payments. Despite this, customers are turning to the law in their fight to recover fraudulent payments, yet their target is not the fraudster who has spirited their cash away, but their bank. The legal claims typically fall into three categories…

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