The liability of the payer's bank in case of authorised push payments fraud

• Published in: Bankarstvo Vol. 52; no. 4; pp. 104 - 138
• Main Author: Terzić, Bojan
• Format: Journal Article
• Language: English
• Published: Association of Serbian Banks 2023
• Subjects: authorised push payment fraud; business email compromise; payer's bank's liability; payment service regulations; quincecare duty
• ISSN: 1451-4354; 2466-5495
• DOI: 10.5937/bankarstvo2304104T

The Authorised Push Payment (APP) fraud is a great danger for payers due to the fact that the value of these transactions is often significantly higher in comparison to unauthorised ones (misuse of payment instruments), while chargeback options are limited. Payers' banks are currently convinced that they cannot bear the losses in the case of APP fraud. Their assurance is based on special payment services regulations. Still, general rules of Serbian contract law, which should be applicable as additional rules, oblige the payer's bank to warn the payer if a bank finds that the payment order could be harmful for them. However, as a precondition for the activation of this bank's duty, a reasonable expectation that an ordinary prudent banker could notice something suspicious related to the payment order should arise. In this case, if the bank failed to warn the client, rules related to divided liability for damage from the Law on Contracts and Torts could be applied.