How to Report Email Fraud: A Step-by-Step Guide
Nowadays, as businesses are increasingly reliant on the use of emails for their communications, email frauds have become more prevalent. A fraudster is typically able to hack into a person’s email account, use that account or another account with a very similar email address to send emails to that person’s business partners and ask the latter to transfer funds (for example as payment for certain invoice) to a “new” bank account, claiming that there is something wrong with the original bank account. Of course, the “new” bank account actually belongs to or is controlled by the fraudster or his associate. The question is, what should the victim do upon discovering the email fraud?
First Step – Report to the Police
If the bank account receiving the funds is held with a bank in Hong Kong, the victim should report the email fraud to the Hong Kong Police Force as soon as possible. If the victim is based overseas, the report can be filed online. The police will then look into the matter and, where appropriate, issue a “no consent” letter to the bank.
Upon receipt of the “no consent” letter, the bank is informed that the police does not consent to dealings of the funds in the bank account and is put on notice that any such dealings may constitute a criminal offence. In practice, as long as the “no consent” letter remains in force, the bank will refuse to deal with the funds in the bank account. Therefore, the issuance of a “no consent” letter will effectively freeze the bank account.
To reclaim the funds lost due to email fraud, the victim has to commence civil action against the holder of the bank account.
However, it should be noted that the police is not in a position to return the funds to the victim or freeze the bank account indefinitely in the absence of an order from the Court. To reclaim the funds lost due to email fraud, the victim has to commence civil action against the holder of the bank account. The police should be kept informed of the progress so that the “no consent” letter can be maintained for as long as possible.
In certain circumstances, for instance if the size of the funds is very substantial, the email fraud victim should also consider applying for a freezing injunction against the bank account.
Second Step – Commence Civil Action and Obtain Default Judgment
When it comes to the commencement of civil action, the victim of email fraud is usually the Plaintiff whilst the holder of the bank account should be the Defendant. A Writ of Summons setting out the victim’s claim will have to be filed with the Court and served on the Defendant. Service on the Defendant should be effected either personally, by sending a copy of the Writ of Summons by registered post to the Defendant at his usual or last known address or, if there is a letter box for that address, by inserting through the letter box a copy of the Writ of Summons enclosed in a sealed envelope addressed to the Defendant.
Upon being served the Writ of Summons, the Defendant must file an Acknowledgment of Service with the Court within 14 days. In reality, defendants in cases involving email fraud rarely do so or take other steps to defend the claim. If the Defendant fails to acknowledge service within the time limit, the victim may apply to the Court for a Default Judgment in his favour.
Third Step – Commence Garnishee Proceedings
After obtaining a Default Judgment, the victim will have to take steps to have it enforced.
After obtaining a Default Judgment, the victim of email fraud will have to take steps to have it enforced. Since the funds in the bank account have been frozen, the most cost-effective way of enforcement is usually by way of garnishee proceedings.
As part of the garnishee proceedings, the bank where the bank account is held will be joined as a party to the legal action in the capacity of a garnishee. Once the Court has vetted the documents and is satisfied that they are in order, it will grant a Garnishee Order to Show Cause (which also has the effect of freezing the funds in question but has to be made absolute before the bank will return the funds to the email fraud victim) and a hearing will be fixed.
In the absence of any communications from the account holder, the bank is likely to adopt a neutral stance and inform the Court that it has no objection to the application for the Garnishee Order to Show Cause to be made absolute. Subject to any queries from the Court, a Garnishee Order Absolute will be granted at the hearing. The email fraud victim can then write to the bank to request payment pursuant to the Garnishee Order Absolute upon which the bank will liaise with the police to have the “no consent” letter lifted and return the funds.
The whole process, from reporting the crime to the police to receiving payment from the bank, is likely to take at least six months. Nonetheless, it is in the interest of the email fraud victim to proceed expediently in case of competing claims against the funds in the same bank account from other victims.
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Written by: Yu Kew Leung, Partner; Irene Lai, Associate