Presidential fraud and banker liability

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Reminder: The bank can be held liable for damages suffered by its client who is a victim of fraud.

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The national press reported on a highly elaborate presidential fraud committed using Deepfake technology, which allowed the perpetrators to embezzle $26 million.

This case has the merit, first of all, of reminding us that President fraud remains a real threat to businesses who must continue to raise awareness among their employees about this risk and implement internal prevention processes.

However, if the chances of recovering funds from the scammer are almost nil It would be wrong to think that the victim of such fraud has no chance of being compensated. since she can also act against her bank.

Indeed, the account-holding banker has a duty of vigilance that requires them to conduct checks in case of apparent anomalies in the functioning of their client's accounts. This anomaly can be material (e.g., a signature not conforming to the signature specimen held by the bank) or intellectual (abnormal account activity due to the volume or total amount of transactions).

In the presence of such anomalies, which should not escape a normally prudent or diligent banker, the banking institution that executes the transfers commits an error that engages its responsibility and obliges it to compensate its client for the damage suffered, even if one of the victim's employees authorized the operations.

Or, very often, operations carried out as part of "president fraud" present intellectual anomalies since the fraudsters will have very large sums transferred out in one or more wire transfers, and these operations in no way represent normal account activity for the client.

So, for example:

  • The Grenoble Court of Appeal ruled that the banking institution committed a fault by executing 12 transfer orders over a period of 8 days for a total amount of €523,033.23.« which represents twelve times the company's average monthly debit amount »
  • The Court of Appeal of LYON found the bank at fault for executing a transfer of €186,280 on the grounds that « the latter's attention was necessarily drawn to the singularity of the transfer, particularly its amount, its date during the summer period, and the fact that the recipient company was not identified as a previous contractor of its client. »
  • The Paris Court of Appeal ordered a bank to pay 1.2 million euros to its client on the grounds that the transfer orders should have prompted an immediate reaction from it, as they met all the criteria of a «Presidential fraud under positive law»In this case, the bank was accused of not noticing the existence of an identical signature on each of the transfer orders and of the fact that the transfer orders were issued for a significant amount, over a short period (namely, the day before and the day before Christmas Eve), or that they were in favor of a recipient to whom no transfer had previously been made, whose account was moreover located in a « known to be used by scammers »(namely Bulgaria)

In conclusion, the mere fact that the disputed transfers were authorized by the account holder or one of their employees is not sufficient to absolve the account-holding bank of its liability.