Fraud newsletter – February 2020


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This is the first of our bi-monthly fraud updates of 2020. In this issue we take a look at: (1) the increased strain of the continued rise of fraud on the police, (2) our ability to recognise fraudulent transactions and (3) some of the developments we expect to see throughout this year.

Whilst overall crime in England and Wales has remained largely static, over the past 12 months the reporting of fraud has continued to rise. Following the investigation by the Times last year into Action Fraud, the review by ex-Met Police Deputy Commissioner Sir Craig Mackey has found that fraud now accounts for one third of all crimes committed in Britain. However, continued underinvestment and inadequate technology has hampered efforts to tackle the crime with less than 1% of police officers directly investigating fraud. Therefore, even though almost 2,000 fraud offences are committed daily in England and Wales, only 1 in 50 results in a prosecution. It is clear that further improvements in the approach taken to investigate fraud are necessary in order to improve the confidence of victims in the police.

Research undertaken by MoneySuperMarket has revealed that that nearly half of people in Britain are unsure whether they would be able to identify fraudulent transactions on their bank statement. Interestingly, confidence in spotting fraud is lower for individuals aged between 18 and 24, with nearly 6 in 10 of being unsure that they could spot a fraudulent transaction in their bank statement. Those aged over 55 were more confident, with more than half claiming to be able to identify a fraudulent transaction. It is believed that older generation are more diligent in reviewing every item on their bank statement. This is particularly concerning given that transactions per debit card have increased by 90% over the last decade and the sharp rise of contactless. With bank statements invariably getting longer, younger people are finding it harder to keep track of their finances and consequently make themselves more susceptible to fraud.

We have seen a steady rise in Authorised push payment (APP) scams, which continue to be one of the largest growing threats to consumers. Fraudsters persuade their victim into transferring money to an account controlled by them, having convinced the individual that they represent a genuine organisation such as a bank or investment company. APP scams can be, by design, sophisticated in nature and continuously evolving to evade preventative measures being put in place by banks. UK Finance has reported that in the first half of 2019 there were 57,549 reported cases, representing losses of £207.5 million. This is a potential increase of 69% on the previous year. Customers should therefore take great care and undertake sufficient due diligence to satisfy themselves that they are transferring money to a legitimate bank account, especially considering only 27% of losses were returned to victims of APP scams. More data is expected to be published on the voluntary code on APP scams, which came into force on 28 May 2019, later this year.

Although cryptoasset markets continue to see significant growth, the legal uncertainty surrounding cryptocurrencies is often cited as a deterrent to adoption, investment and development. Therefore, the Commercial Court finding that cryptocurrencies are property as defined English law and capable of being subject to an interim proprietary injunction in the case of AA v Persons Unknown [2019] EWHC 3556 (Comm) (17 January 2020) is an important ruling. Whilst we expect that each case will need to be considered on its own merits, further judicial consideration of this area is inevitable and we expect that there will be continued recognition of cryptocurrencies as property. This will undoubtedly impact more settled areas of law, including cases of fraud.

Articles of interest

Cyber-Attacks (Asset-Freezing) Regulations 2019

The Cyber-Attacks (Asset-Freezing) Regulations 2019 implemented measures to allow member states of the EU to respond and deter cyber-attacks. There is a particular focus on cyber-attacks originating outside the EU.

British Airways to be fined a record £183 million

The Information Commissioner's office announced its intention to fine British Airways a record £183.39 million in relation to a data breach reported in September 2018.

Cryptoassets – Development of FCA Guidelines

Following the publishing of the European Banking Authority's stance on cryptoassets, the FCA published the results of its consultation on cryptoassets from a variety of organizations involved in the market in preparation for greater regulatory intervention in the sector.

UKJT issues legal statement on the Status of Cryptoassets and Smart Contracts

The UK Jurisdiction Taskforce published a non-binding legal statement on the status of cryptoassets and smart contracts under English law, providing a degree of legal certainty.

Blockchain, tokenised property and the Middle East

The Middle East has continued to embrace blockchain technology. It would seem that the Middle East is acting as a proactive testing ground and market leader for the blockchain market.

Paving the way for data breach group actions

The case of Lloyd v Google LLC [2019] EWCA Civ 1599 reinforces the validity of group actions relating to the unlawful processing of personal data where there is no physical damage or distress suffered.

Recovering the ransom

In the case of AA v Persons Unknown [2019] EWHC 3556 (Comm) (17 January 2020), the Commercial Court found that cryptocurrencies are property as defined by English Law.

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