FRAUD PREVENTION: PROTECTING YOUR PAYMENTS IN A CHANGING LANDSCAPE

Tim Sheehan of South West Foreign Exchange explains the latest regulations on fraud reimbursement and shares practical advice on preventing payment fraud, particularly for businesses in the gun trade.

As of October 7, 2024, payment service providers (PSPs), including South West Foreign Exchange Ltd (SWFX), must adhere to new rules from the Payment Systems Regulator. These rules require PSPs to fully reimburse victims of authorised push payment (APP) fraud up to £85,000 for payments made in GBP via CHAPS or FPS in the UK.

This means that if, for any reason, funds sent by us, or any other banking or regulated payment institution on your behalf, end up in the wrong account due to fraudulent activity, then up to £85,000 can be reimbursed, provided certain criteria are met. This £85,000 liability is split equally between the sending bank or payment institution and the receiving bank or payment institution.

Following this announcement from the regulator, various articles in the press have reported on fraud incidents, particularly involving larger institutions where personal contact is often limited. As we know, almost all fraudulent activity could have been prevented if there had been better communication between parties and more care taken to ensure the destination of funds was legitimate.

The main cause of these types of fraud is that, when setting up new beneficiaries, some parties fail to take the necessary steps to verify that the bank details on the invoice are correct and belong to the intended recipient. Many institutions lack verbal contact with their clients and do not have the one -to-one relationship required to ensure fraud prevention.

At SWFX, with 15 years of experience and thousands of transactions processed, we have never had a fraud claim lodged against us for loss of funds. This is due to two key practices: first, good communication, and second, educating our clients to ensure the details they provide are genuine. We always ask clients to verify details verbally with their suppliers to confirm accuracy.

We stress the word verbally. When receiving new banking information, there is no point in verifying it via email, as fraudsters typically use this exact method of communication – they are often behind the email exchange. Fraudsters can intercept email streams and alter bank details on open emails or even modify attached PDF invoices, making them appear entirely legitimate.

Regardless of how or with whom you are communicating, it is essential to verbally confirm the bank information sent to you to ensure its accuracy before sending any money. This is the only reliable way to mitigate fraud, and we make sure all our clients take this precaution before we verify the information with them.

If fraud is a concern for you or your business, and you are making multiple domestic or international payments, we can assist – not just with secure payments but also with a comprehensive foreign currency exchange and risk management service to help you stay risk – and fraud-free.

This service extends to those in the gun trade, whether you are new to the market or have an established history. Our clients gain access to multi-currency virtual IBAN accounts that integrate directly with our foreign exchange services. This means you can manage, maintain, and distribute funds in up to 39 currencies from a single account. These facilities function similarly to an online bank account but with certain restrictions.

As we all know, fraud is pervasive today. Although we are sometimes advised to avoid sharing information with unfamiliar sources, our approach relies on regular, open communication with our clients. This frequent contact helps build familiarity and ensures that we are a known, trusted voice, ready to assist whenever possible.

SOUTH WEST FOREIGN EXCHANGE

T: 01548 857009

E: tim@swfx.co.uk

W:southwestforeignexchange.co.uk