Peebles Media Group scammed employee not required to repay £108,000

In a case at Scotland’s High Court the importance of maintaining up-to-date training has come to light. A woman employee who was scammed for £193,000 was ruled not liable to repay the money.

Patricia Reilly fell victim to a ‘whaling’ scam and was subsequently sacked from her position as credit controller at Peebles Media Group. In an email in 2015 the fraudster posed as managing director Yvonne Bremner. She requested that Ms Reilly make payments to an unknown firm.

Glasgow-based company Peebles alleged that Ms Reilly ignored warnings about scams and made the payments to the unknown firm.

£85,000 of the scammed money was refunded by the bank although Peebles attempted to claim the rest of the money (£108,000) from Ms Reilly.

Lord Summers, in his judgement of the case at the highest court in Scotland, stated that the fraudster was the real culprit and the case was very tragic. The fraudster is still at large.

Defending herself Ms Reilly stated that Peebles was partly to blame because she had not received training on the identification of fraud. Ms Reilly said that she had carried out the relevant checks in order follow the correct procedures.

Whaling – also known as ‘CEO fraud’ is highly targeted. The scam involves a scamster posing as a senior executive. Unlike phishing scams, the fraudster does not need to have technical knowledge of the company.

The National Cyber Security Centre has said that whaling is now one of the biggest risks which businesses are facing.

Whaling scams normally involve personalised information about the company. The scams suggest a sense of urgency and use an authentic business tone and language.

At the ruling Lord Summers stated that it was difficult to say whether Ms Reilly was in breach of bank policies because the outcome would have been the same.

He stated that he was aware the Ms Reilly had acted in breach of her obligation of reasonable care in transferring funds and that she had done this on her own initiative. He did not feel that the loss of money was the consequence of the breach of contract.

Lord Summers went on to say that he was not satisfied that the scammers email address had been clearly visible. Likewise, the language of the email had not raised suspicion. Also noted was the animosity between the two ladies. Whaling scams in 2015 were a relatively new phenomenon.

Experts warm that despite the scam being relatively new, employees could still find themselves liable after falling victim to them.

Ms Reilly was ruled not to be in breach of her contact and obligation. The loss suffered by Peebles Media Group was ‘exceptional and unnatural.’ Ms Reilly was found to be ignorant of the fraud which had taken place between herself and the company.

At the time of the scam both Yvonne Bremner and the line manager had been on annual leave, leaving Ms Reilly in charge. Ms Reilly – after receiving the first request for funds – had contacted her line manager who was authorised and trained to make such payments. The lie manager processed the payment via the online company account.

On receiving further requests for funds Ms Reilly made the payments and contacted her line manager again to confirm a PIN needed to use the online system. Ms Reilly paid a total of £193,250 to the scam account. This included an initial amount authorised by her line manager.

Ms Reilly was fired from her position at Peebles on 11 November 2015. She appealed against her dismissal but lost the case. She then began tribunal proceedings against the company.

Ms Reilly dropped her case after her partner became ill and passed away. Peebles began their own case against Ms Reilly, arguing that she should repay the money which had not been recovered.

Lord Summers stated that there were no additional steps Ms Reilly could have taken to prevent the scam. He did not consider her to be in breach of her obligation, neither did he think that if she had read the fraud warnings the outcome would have been any different.

Lord Summers said that there was no evidence that relevant training was available at the time. The people who should have processed the online payments were Yvonne Bremner and the line manager. If training was needed, it was these two members of staff who should have received it.

Training for all staff members on the identification of scams and threats should be set in place in order to reduce the risks and tactics used by fraudsters.


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