TONY HETHERINGTON: How did a scammer set up a real account to steal £3,400?

Tony Hetherington is Financial Mail on Sunday’s ace investigator, fighting readers corners, revealing the truth that lies behind closed doors and winning victories for those who have been left out-of-pocket. Find out how to contact him below. 

M.H. writes: I was scammed out of £3,400 after I paid an invoice that appeared to come from an antique dealer I trusted. 

A criminal had hacked into the antique dealer’s email and sent me an invoice from it with bank details linked to Modulr FS. 

Why did Modulr apparently fail to conduct adequate ‘Know Your Customer’ and anti-money laundering checks, allowing this fraudulent account to be opened? 

Tony Hetherington replies: You have a genuine business relationship with the antique dealer, and when you received an expected invoice there was no reason not to pay it. What you did not know was that the emailed invoice did not come from the antique dealer, even though it appeared legitimate.  

Nor did you know that the bank details shown on the invoice were bogus, despite the account being in the antique dealer’s name. This is what is known as an Authorised Push Payment (APP) scam.

Duped: Why did online payment firm Modulr apparently fail to conduct adequate ‘Know Your Customer’ and anti-money laundering checks?

Modulr is not a bank. It is an online business which the Financial Conduct Authority describes as an ‘Authorised Electronic Money Institution’. It has permission to provide electronic payment services, but the FCA says that the Financial Services Compensation Scheme will not be able to consider a claim against the firm if it fails.

Nonetheless, Modulr tells customers: ‘The security of your money is our top priority. We have anti-fraud measures in place and play an active role in cross-industry organisations working to tackle financial crime, both to prevent fraud and to ensure best practices are followed when fraud does occur.’

So what checks did Modulr make? Well, according to the west London-based company, the account was opened by a customer named Ibrahim Kazeem, who gave an address in Hackney in east London and produced a Nigerian passport as proof of identity. He also gave an email address, though when I tried it, it bounced back with a message saying ‘This mailbox is disabled’.

He gave no phone number and his name does not appear on the current electoral register.

There is a refund scheme for victims of Authorised Push Payment fraud, but it was introduced only after these scams became so widespread that they were an open scandal. The scheme was not backdated, and Modulr told me that your loss took place before it was launched.

I did point out to Modulr that you had not even mentioned the refund scheme to me. What you did want to know was how someone could open an account which bore the name of the antique dealer. Modulr refused to explain, and told me it was policy not to comment on what could become a legal matter. But it added: ‘Modulr co-operated in full accordance with its obligations.’

And so to Kazeem himself. I did wonder whether some third party had perhaps ‘borrowed’ his passport and personal details to open the account, so I set out all the details in a letter to him at the Hackney address. Twice. He did not reply.

I also made a test transaction, sending money to his Modulr account, but this was rejected as it appears it was emptied and no longer exists.

You have told me that you intend to press ahead with a civil action against Modulr. Well done. It will be interesting to see what new information it is forced to reveal in court about its checks. The online financial world can be a dangerous place where anyone can pose as anyone. It needs to be better.

Life policy claim that went round in circles 

P.S. writes: I am writing out of pure frustration on behalf of my 85-year-old sister, whose partner passed away in November. 

He had a life policy with Canada Life International, valued at £22,000. 

His son is the executor and contacted CLI, but after considerable delay it replied that he did not have the authority to make the claim.

Struggle: Canada Life International  has tied itself in knots over this issue

Tony Hetherington replies: Canada Life International (CLI) has tied itself in knots over this.

Even your solicitor could not get an explanation of what has gone wrong or who CLI believed was entitled to claim on the policy.

Your sister authorised me to question CLI, but it told me: ‘We are unable to share specific details about the policy due to confidentiality.’

It did add: ‘As the policy is held in trust, we are required to obtain documentation from all trustees, to comply with regulatory requirements.’

There are two trustees – your sister’s deceased partner, and you!

While following my intervention CLI paid the £22,000 – which is great news – its knots still grew bigger.

Even though it was you who contacted me, and you are the only surviving trustee, CLI has decided that it should have spoken to you before speaking to me, so it has recorded that itself has breached data regulations.

You couldn’t make it up!

If you believe you are the victim of financial wrongdoing, write to Tony Hetherington at Financial Mail, 9 Derry Street, London W8 5HY or email tony.hetherington@mailonsunday.co.uk. Because of the high volume of enquiries, personal replies cannot be given. Please send only copies of original documents, which we regret cannot be returned.