DON’T GAMBLE WITH BANKING DETAILS VIA EMAIL

Electronic invoices and banking details received via email are now routine, but do you take steps to confirm those details? Do you verify account changes or look for signs of suspicious activity? Many people don’t, relying on the information at face value and risking serious consequences from cybercriminals. The recent case of Edward Nathan Sonnenberg Inc. v Judith Mary Hawarden (2024) serves as a stark reminder of the risks involved.

In this case, Ms. Hawarden intended to pay for a property purchase to Edward Nathan Sonnenberg Inc. (ENS), unaware that her email account had been hacked. Cybercriminals intercepted her correspondence with ENS and altered the banking details. Without verifying the information, she transferred R5.5 million into the fraudsters’ account, and the money could not be recovered.

Ms. Hawarden took legal action, and the High Court initially awarded her the R5.5 million. However, on appeal, the Supreme Court of Appeal (SCA) overturned this ruling. The SCA examined whether ENS had a legal duty to protect Ms. Hawarden from cybercrime. The Court noted that Ms. Hawarden was not a client of ENS, there was no contractual relationship, and she had been warned about the risk of cybercrime. Despite these warnings, she did not take reasonable steps to verify the banking details.

The SCA rejected the idea that creditors, such as ENS, have a legal duty to protect debtors from cybercrime, as this could lead to “indeterminate liability.” This echoes concerns raised in the Country Cloud Trading case, where the Constitutional Court warned against imposing overly broad liability for economic loss.

Cybercrime is a growing threat, with the International Monetary Fund’s 2024 Global Financial Stability Report noting a sharp rise in incidents, with losses quadrupling since 2017. The ENS v Hawarden case underscores the importance of vigilance. Consumers must take proactive steps to protect themselves, as legal recourse may not always be available.

Verifying banking details, confirming account changes, and being cautious with emails can help reduce the risk of falling victim to these sophisticated scams.

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