Financial and Banking Disputes

APP (Authorised Push Payment) fraud, also known as bank transfer fraud, occurs when a person is deceived into authorizing a payment to an account that they believe belongs to a legitimate payee, such as a business or individual. The deception often involves sophisticated tactics, such as impersonating a trusted entity through phishing emails or fraudulent websites. Once the victim authorizes the payment, the funds are swiftly transferred to the fraudster's account. Unfortunately, unlike other forms of fraud, APP fraud involves the victim willingly initiating the payment, making it a challenging issue for both individuals and financial institutions to address.

In many cases, the banks will reimburse victims of fraud under a voluntary code that was brought in in May 2019. However, that is not always the case, and sometimes the bank will be quick to reject a customer’s application. A review carried out in 2021 noted that many bank decisions to refuse to reimburse were incorrect - and that the bank was liable to reimburse the victim. If your bank has refused to reimburse you for a fraudulent automatic push payment, you should seek professional advise to understand if you have a case to bring.

Email interception fraud, also known as email account compromise, is a cybercrime where unauthorized individuals gain access to email accounts for malicious purposes. This often involves sophisticated techniques such as phishing or hacking to obtain login credentials. Once inside, fraudsters can monitor, intercept, or manipulate emails, posing a significant threat to sensitive information, financial transactions, and business communications. They may use this access to redirect funds, gain unauthorized access to confidential data, or initiate fraudulent activities while impersonating the email account holder.

MBM Commercial’s team have successfully:

• Secured a significant six-figure settlement at mediation in England for clients claiming against their bank in connection with an online fraud perpetrated on them
• Secured a six-figure settlement at mediation in Scotland for a client claiming against their bank in connection with a cryptocurrency exchange scam
• Recovered a five-figure sum lost to an email interception scam

Before signing the bank’s personal guarantee, the bank said or wrote something false which you relied upon and that induced you to sign the guarantee. In other words, but for the bank’s false assurance about something, you would not have signed the guarantee.

If the bank put extreme pressure on you to sign the personal guarantee, then a judge may decide that by the bank’s actions, you did not consent (despite signing the guarantee), and the personal guarantee is void and cannot be enforced against you. If you were left with no practical choice but to submit to the economic pressure from the bank, then this remedy may be of assistance to you.

in some banking relationships it may be possible to argue that a duty of good faith exists. This is an argument that can be advanced where there has been a long standing and close relationship between the business and the bank, and where the bank in reality provided advice to the business. In these circumstances it can be argued that a duty to act in good faith has been created, and if the bank, in its actings towards the business, has breached that duty, then the duty to act in good faith may render the personal guarantee unenforceable. The duty is quite broad and may cover any acts of bad faith by a bank towards the business. For example, if your bank is the main instigator of the collapse of the company or person that borrowed the money, then by acting in an unfair manner, the personal guarantee may be held to be unenforceable by a court.

If the bank used clear words either in writing or verbally that it will unequivocally not enforce the personal guarantee for a certain period of time or until something is done then a legally binding promise may have been created which could be relied upon to defend enforcement proceedings brought by the bank. A unique feature of the law of promise in Scotland in contrast to England is that a promise is legally binding even when the person making the promise receives nothing in return from the other person. So while in England a bare promise from a bank not to enforce the personal guarantee would not be binding, the promise would be binding if made north of the border.

If the personal guarantee was signed on terms which, by mistake, do not reflect the agreement between you and the bank, then it can be argued that there is no agreement due to error. However, it seems that the current law in Scotland is that for the personal guarantee to be rendered void and unenforceable, there must not only be error but also some other factor such as the bank acting in bad faith.

If the individual was induced to sign a personal guarantee in circumstances where he or she is placed under “force and fear”, whether by the bank or by a third party, it can be argued that the guarantee is void. Examples include the situation in which a husband owns and runs a business, but through threats, intimidation or abuse, persuades the wife to guarantee the debts of the company. In these circumstances the wife has not freely and voluntarily given her consent to the personal guarantee, and it matters not that the bank may have been unaware of the circumstances in which the wife came to sign the guarantee document: the abusive conduct of the husband was such, it can be argued, to overpower the wife’s will.

The personal guarantee expires 5 years from becoming enforceable at which time it can no longer be enforced by the bank. This is not 5 years from signing the personal guarantee but from when the bank calls in the debt. The exact time when the guarantee became enforceable is open to dispute.