The Lemon Fool

This is an interesting case, where a Dr Philipp and his wife were deceived by criminals into instructing Barclays Bank to transfer £700,000 in two payments from Mrs Philipp’s current account with the Bank to bank accounts in the United Arab Emirates. It will come as no surprise to my cynical fellow Fools that the money was lost.

Understandably, Mrs Philipp was not best pleased, and sued Barclays, claiming it was their fault she'd lost the money. The basis of her claim was that the Bank owed her a duty under its contract with her or under common law not to carry out her payment instructions if – as she claimed – the Bank had reasonable grounds for believing that she was being defrauded.

This is the original High Court decision - https://www.bailii.org/ew/cases/EWHC/Comm/2021/10.html The decision was appealed to the Court of Appeal and then to the Supreme Court, who gave their judgment a few days ago. However, if you're not aware of the outcome (or even if you are) I'd recommend reading paragraphs 27 - 71, which describe the sequence of events, and then see what you think.

I don't expect anyone to carry out a legal analysis but I'd just like to know what your instinctive reaction is, and why you take that view. I've therefore kept the options to a simple yes or no.

It would also be interesting to know what you would have done (or perhaps more accurately think you would have done) in a similar situation.

I would never have moved my money to an account of their suggestion.

That is Fraud 101.

Paul

Perverse incentives all round.

The expectation that banks "refund" people who've lost money through their own stupidity is presumably supposed to incentivise the banks to develop serious hurdles to fraudulent transactions: KYC, and especially on newer accounts that might exist only to receive stolen money and disappear.

But it surely creates a huge new target for organised crime: deliberate losses (to an accomplice) in the expectation of a refund.

It is incredible, and worrying, that a medical doctor can be so stupid and lacking in common sense as to fall for this.

The law has gone much too far in forcing banks to pay for customers stupidity, at the expense of shareholders and other customers.

I'm pretty sure none around here are likely to fall for such fraud. But I'd hope that a bank employee would be even less likely to fall for it, especially after all the training and testing they have to undergo and with it being their job to provide some duty of care yet here we are.
There are some gullible people, stupid people or unlucky people. What kind of penalty should they suffer if they do something that causes something awful to happen to themselves? Shouldn't big business try to help if it doesn't hurt their bottom line and in fact helps show social responsibility.

To be clear, I'm suggesting the bank should have refused, point blank, to carry out the transfers. And I'd be happy for them to effectively be fined for doing so.

uspaul666 wrote:To be clear, I'm suggesting the bank should have refused, point blank, to carry out the transfers. And I'd be happy for them to effectively be fined for doing so.

The banks did all the checks, they locked accounts, they declined transfers.

The victims went into several branches, they lied to Tilney staff, they passed on security details to third parties explicitly against the banks advice and requirements.

The victims refused access to the Police, did not co-operate with them.

Under what circumstances is this the fault of anyone other than the victim?


Safety systems are there for a reason. Our car has loads. I can turn them all off and go out on a wet road and spin the rear wheels at 100mph, but I'm not stupid enough. But there are people out there who are, they usually end up on youtube, but I bet the manufacturer doesn't pay out for their stupidity.

Yes they should definitely get their money back........ And all my Carrillion money should be too.

I do have a list that my bank should return.

All payments to the dog and duck.
All payments to that fast car I wrote off.
All the IT that works fine but not much use. Or should I advertise my black and white 386 laptop.
All lottery payments.
Most spousal outgoings

This is just the start

Clitheroekid wrote:I'd recommend reading paragraphs 27 - 71, which describe the sequence of events, and then see what you think.

Notwithstanding me losing track of what happened by about para 40, I think I would be highly unlikely to transfer funds of my own that I'd been persuaded were 'at risk' to anywhere suggested by someone else. Including by the police or the FCA or my own bank.

I'm pretty sure if rattled enough, I'd open a new bank account of my own somewhere secret only I know about, and shovel it all in there for safekeeping while I try to figure out what is going on.

I'm inclined to say I don't think they shouldn't be compensated.

DrFfybes wrote:

uspaul666 wrote:To be clear, I'm suggesting the bank should have refused, point blank, to carry out the transfers. And I'd be happy for them to effectively be fined for doing so.

The banks did all the checks, they locked accounts, they declined transfers.

The victims went into several branches, they lied to Tilney staff, they passed on security details to third parties explicitly against the banks advice and requirements.

The victims refused access to the Police, did not co-operate with them.

Under what circumstances is this the fault of anyone other than the victim?


Safety systems are there for a reason. Our car has loads. I can turn them all off and go out on a wet road and spin the rear wheels at 100mph, but I'm not stupid enough. But there are people out there who are, they usually end up on youtube, but I bet the manufacturer doesn't pay out for their stupidity.

After all that, it seems to me there is a very strong case for the bank to be awarded costs! But really the law is an ass for allowing such a case to get so far.

uspaul666 wrote:To be clear, I'm suggesting the bank should have refused, point blank, to carry out the transfers. And I'd be happy for them to effectively be fined for doing so.

About ten years ago, I was making an exceptional (for me) transfer of a five-figure sum. The recipient was actually a family member, though the bank wouldn't've had any better clue of this than our sharing an unusual surname.

I did my usual (for the time) and started with a £1 transfer to check I had all the details correct. Having verified its safe arrival with the recipient, I made the big transfer, and was pleasantly surprised when the system confirmed the payment had gone through, without making me jump through hoops.

The following day I had a call from the recipient: when could he expect it? Erm ... he should already have it! Logged on to my account, only to find myself locked out without explanation. Phoned them, locked out of that too: they wouldn't talk to me until I'd verified my identity in person at a branch! Dammit, surely if it's making me jump through such hoops it should've done so yesterday rather than accept the transaction and bugger me up retrospectively!

Well, at least I'm able-bodied enough to travel a few miles to a branch - though it was bloomin' inconvenient with pressing work commitments! Dug up my passport, jumped on the bike, and pedalled through the autumnal[1] rain to queue at a small suburban branch. Where a member of staff did sort out the payment.

This was my contribution to the cost of a time-critical cancer operation: we had decided to go private after the NHS's promised date had been continually slipping back for about four months! Perhaps the bank stopping such a transaction should be made liable for the subsequent death of the patient?

[1] Late October or early November.

UncleEbenezer wrote:
Well, at least I'm able-bodied enough to travel a few miles to a branch - though it was bloomin' inconvenient with pressing work commitments! Dug up my passport, jumped on the bike, and pedalled through the autumnal[1] rain to queue at a small suburban branch. Where a member of staff did sort out the payment.

This was my contribution to the cost of a time-critical cancer operation: we had decided to go private after the NHS's promised date had been continually slipping back for about four months! Perhaps the bank stopping such a transaction should be made liable for the subsequent death of the patient?

[1] Late October or early November.

Well as we have seen banks made liable so often for payments where they were not reasonably at fault, one can't blame them!
I guess the answer is to call them in advance of the payment telling them about it, and the reason, so it goes through without a problem.
I have done that in the past occasionally.

scrumpyjack wrote:

UncleEbenezer wrote:
Well, at least I'm able-bodied enough to travel a few miles to a branch - though it was bloomin' inconvenient with pressing work commitments! Dug up my passport, jumped on the bike, and pedalled through the autumnal[1] rain to queue at a small suburban branch. Where a member of staff did sort out the payment.

This was my contribution to the cost of a time-critical cancer operation: we had decided to go private after the NHS's promised date had been continually slipping back for about four months! Perhaps the bank stopping such a transaction should be made liable for the subsequent death of the patient?

[1] Late October or early November.

Well as we have seen banks made liable so often for payments where they were not reasonably at fault, one can't blame them!

Erm, it's my money, and ... perhaps I should've added emphasis:

I made the big transfer, and was pleasantly surprised when the system confirmed the payment had gone through, without making me jump through hoops.
[...] Dammit, surely if it's making me jump through such hoops it should've done so yesterday rather than accept the transaction and bugger me up retrospectively!

Not to mention the fact it made no attempt to alert me to having buggered me up!

I guess the answer is to call them in advance of the payment telling them about it, and the reason, so it goes through without a problem.
I have done that in the past occasionally.

I do that when I know in advance. I did when I bought a house, and I also let them know when I'm about to travel abroad (so will be spending there).

That's not the nature of an emergency payment!

scrumpyjack wrote:I guess the answer is to call them in advance of the payment telling them about it, and the reason, so it goes through without a problem.
I have done that in the past occasionally.

That's a definite maybe! Possibly it would have gone through anyway.

Every now and again, when I'm rate tarting and see some new savings a/c that's offering more than one of my existing ones, I shuffle five figure sums through my current a/c, which is the "nominated account" for pretty much all my savings a/cs, and that occasionally results in a freeze and lock out and me having to call them to clear it.

It happened a week or two back when I'd put in withdraw-to-nominated instructions to three savings a/cs in order to shuffle the funds to a new savings a/c I'd opened the same day. The first withdrawal came almost instantly so I shuffled that to the new a/c, all fine. Then the second one a few hours later and I did the same and ... freeze and lock out.

So, called them, got that sorted out, and told the agent that there'd be another £nnK shuffling through the a/c to the same savings a/c probably the next day, and could they flag that as ok to prevent another possible lock out. The answer was the same as it's always been when in a similar situation: can't do 'cos "the algorithms are automatic" and they can't put in any "future overrides". He did also go on to say that them having cleared the blocked transfer to that new account further transfers to it were "less likely" to be blocked, but he couldn't guarantee it. (The next day transfer did, indeed, go though without any problem).

I've also been told before that "test" transactions, like sending £1 first to make sure it gets there ok, are considered possible triggers.

Like most others commenting, my initial reaction is that I wouldn't have been fooled and the bank wasn't at fault.

However, on reflection, the steps taken by the fraudster to convince the victims were pretty extreme - including managing to spoof a police officer's phone number. How sure can we all be that despite our natural scepticism, we might not have been persuaded at some point - or perhaps by yet another stage which the fraudster had up his sleeve but didn't need in this case?

In any case, it seems that the case isn't over as it now goes back to the High Court for a hearing on the claim that the Bank didn't act quickly enough to recover the funds after the fraud was discovered.

chas49 wrote:In any case, it seems that the case isn't over as it now goes back to the High Court for a hearing on the claim that the Bank didn't act quickly enough to recover the funds after the fraud was discovered.

It's already been up to the Supreme Court, which ruled in the bank's favour.

viewtopic.php?p=601756#p601756

chas49 wrote:Like most others commenting, my initial reaction is that I wouldn't have been fooled and the bank wasn't at fault.

However, on reflection, the steps taken by the fraudster to convince the victims were pretty extreme - including managing to spoof a police officer's phone number. How sure can we all be that despite our natural scepticism, we might not have been persuaded at some point - or perhaps by yet another stage which the fraudster had up his sleeve but didn't need in this case?

In any case, it seems that the case isn't over as it now goes back to the High Court for a hearing on the claim that the Bank didn't act quickly enough to recover the funds after the fraud was discovered.

Cutting through the fog of all the detail, being asked to move your money into a different account, one that YOU didn't set up, seem to be the Big Red Flag I like to think most of us here would probably notice.

But the peeps in the OP repeatedly missed it.

This is the feature of these scams that does the damage and which the banks should publicise. But they don't seem to.

Clitheroekid wrote:This is an interesting case, where a Dr Philipp and his wife were deceived by criminals into instructing Barclays Bank to transfer £700,000 in two payments from Mrs Philipp’s current account with the Bank to bank accounts in the United Arab Emirates.

However, if you're not aware of the outcome (or even if you are) I'd recommend reading paragraphs 27 - 71, which describe the sequence of events, and then see what you think.

Absolutely fascinating.

What comes through very clearly, to my mind, is this whole thing is very much a matter of human psychology (as many things are!). Of particular interest is in relation to the friends of the Philipps who were able to recognise something was going wrong and even intervened, meeting with Tilney, going to an HSBC branch and eventually to the police after being unable to convince Philipps that he was making a serious mistake. One of them commenting that they had never seen Mr Philipps in such a state in all the 33 years they had known him.

It struck me that Philipps had somehow being inducted into a state of mind not dissimilar to that of people in a cult, or a conspiracy theory mindset, where it is impossible for outsiders to convince them of what is happening by rational argument.

mc2fool wrote:

chas49 wrote:In any case, it seems that the case isn't over as it now goes back to the High Court for a hearing on the claim that the Bank didn't act quickly enough to recover the funds after the fraud was discovered.

It's already been up to the Supreme Court, which ruled in the bank's favour.

viewtopic.php?p=601756#p601756

The final paragraph of the Supreme Court's judgment was:

For these reasons, I would allow the Bank’s appeal and restore the order of the
judge giving summary judgment in favour of the Bank. I would, however, vary that
order by limiting the judgment to the dismissal of Mrs Philipp’s claim insofar as it is
based on the allegation that the Bank owed her a duty not to execute her payment
instructions. I would refuse summary judgment in relation to her alternative case that
the Bank was in breach of duty in not taking adequate steps to attempt to recover the
money transferred to the UAE insofar as that case is based on inaction after 27 March
2018.

https://www.supremecourt.uk/cases/docs/ ... dgment.pdf

The court's press summary says:

The Supreme Court unanimously allows the appeal, holding that the Bank did not owe the alleged duty to Mrs Philipp. The Court therefore restores the order of the judge granting the Bank summary judgment (but varies it to permit Mrs Philipp to maintain an alternative claim based on the Bank's alleged failure to act promptly to try to recall the payments after the fraud was discovered). Lord Leggatt, with whom the other Justices agree, gives the court's judgment.

https://www.supremecourt.uk/press-summa ... -0075.html

So Mrs Philipp is still able to pursue part of her claim.

Another analysis here (https://ifamagazine.com/supreme-court-d ... d-victims/) which also comments on the new regulations which should be coming out....

chas49 wrote:So Mrs Philipp is still able to pursue part of her claim.

Thanks, well spotted.

There is a view on various consumer programmes that banks, who have lots of money, should always give it to sob story fraud victims. Its never made clear that these payments make the rest of us poorer, not the banks.