Here we explain how having Rural Protect meant that a victim of fraud was able to receive reimbursement for a part of a payment they made into a fraudster’s account, that their bank could not recover.
Insured party: Arable Farmer
Section of cover: Company Legal Liability
Applicable cover: Third Party Fraud and Forgery
Circumstance: Invoice intercepted by a fraudster
Legal fees value: £10,000
The scenario:
The insured was interested in purchasing a Land Rover from a dealership in England. They made a visit to the dealership to view the vehicle and during the visit gave verbal confirmation that they would like to purchase it.
While the insured is still in the dealership, the dealership emailed over the invoice to the insured. As the insured had seen the vehicle, was happy with it and had agreed to buy it, they made a call to their office and gave instructions to make a payment to the bank details provided on the invoice.
What happened?
A fraudster scammed the insured by intercepting the invoice and changing the bank details so that the money would be paid into the scammer’s account.
A payment of £49,500 was made to the fraudulent account while the insured was still in the dealership. The insured and the dealership realised something was wrong when the payment had gone through from the insured’s bank account but nothing had been received by the dealership.
The police were informed; they advised the insured to contact their bank as soon as possible to try and recover the money. The insured’s bank managed to recover £39,357 with no further sums forthcoming, which left the insured £10,143 short due to the rest of the money being unrecoverable.
The outcome:
The insured submitted a claim under the Third Party Fraud and Forgery section of their Rural Protect Policy, seeking to claim the maximum amount recoverable through the policy.
The insured was reimbursed up to their limit of indemnity of £10,000. At the conclusion of the claim, having received their claim settlement, the insured only suffered a remaining uninsured loss of £142.84.
Things to consider:
Rural Protect offers cover for Company Legal Liability (CLL), so alongside the many other features and benefits of Rural Protect, CLL cover you for up to £10,000 for third party electronic funds transfer, telephone fraud, and third party fraud or forgery cover.
Not only this, the standard Third Party Fraud and Forgery indemnity limit of £10,000 can be increased to up to £100,000, so the claim above could have been paid in full if an adequate limit had been chosen. As a broker, to ensure the correct value is chosen, check the maximum payment your client would make in any one transaction, such as in our example above. The insured was lucky that their bank was able to initially recover so much – this is not always the case!
How can you, as a Broker, help your clients?
As a broker, naturally, you want to help your clients avoid claims like the above. Here are some tips, by no means exhaustive, to help your clients avoid suffering from fraudulent activity:
- Verbally check the details of invoices or payment instructions against the person who sent it to you – it is better to be safe than sorry.
- Check the invoice carefully, particularly looking at the wording used, company logo, and branding to make sure it marries up with your knowledge of that company, e.g. Land Rover is a respected and high-end and respected brand, and as such their documentation would reflect this. Or compare the invoice to previous ones received that you know to be genuine.
- Check the email address that the invoice has come from. Fraudsters can easily impersonate email addresses to make them appear genuine.
- Pay attention to Confirmation of Payee (CoP) alerts – a helpful feature designed to prevent Authorised Push Payment (APP) fraud and payments being sent to the wrong bank account, by matching up the account name inputted against the actual account details when a new payment is being set up.
- Ensure staff are vigilant, stick to relevant checks and processes, and educated in fraud detection through awareness training courses.
