The UK arm of Banco Santander successfully dismissed a lawsuit that claimed lenders have a responsibility to recover funds stolen by fraudsters posing as customers. The case was brought by CCP Graduate School, which, in 2022, transferred approximately £415,000 (around $537,000) from its NatWest account to a Santander account controlled by fraudsters.
CCP Graduate School alleged it was a victim of authorized push payment (APP) fraud, where individuals are deceived into sending money to someone impersonating a legitimate payee. Each year, thousands of individuals and businesses in the UK fall prey to APP fraud, with UK Finance reporting over 232,000 incidents in 2023. Stricter regulations are set to take effect in October 2024.
The school's legal representatives argued that Santander had a duty to attempt to retrieve the stolen funds, referencing a 2023 Supreme Court case against Barclays. While the Supreme Court dismissed most claims against Barclays, it did affirm that banks could have a duty to assist customers in recovering funds lost to fraud.
Despite this, the High Court dismissed CCP Graduate School's case against Santander, similar to a prior dismissal of its lawsuit against NatWest. Judge Jennifer Eady stated there was no obligation for a bank to take action to mitigate harm to a third party that is not its customer.
She noted that if CCP Graduate School’s position were accepted, banks would need to engage with all other financial institutions involved in the transaction to initiate recalls or prevent further fund transfers. Given the volume of transactions processed monthly, such demands would place an "unacceptable burden" on banks outside their contractual obligations to customers. Santander did not provide immediate comments regarding the ruling.