An importer who paid for goods ordered on-line from a factory in China by EFT to the bank account of a hoaxer impersonating the seller, has been ordered to pay the full price of the goods.
The buyer and seller had agreed terms of sale of aluminium fencing products by email and the seller provided its bank account details for payment.
The goods were to be delivered to a freight forwarder in China to ship to Australia on terms that the carrier would release the goods in Australia to the buyer on receipt of notification from the seller that payment in full had been received.
An on-line swindler impersonating the seller intervened in their email correspondence and the buyer paid 70% of the purchase price to the fraudster’s bank account prior to delivery.
The fraud was actuated by way of an email specifying that payment of the US$108,000 should be made to a different HSBC bank in Hong Kong. The email nominated an account number for the transfer.
The buyer “was concerned that something might be amiss when he specifically requested confirmation of the change of payee’s details on the seller’s letterhead”. He received no such confirmation and did not phone or fax for that purpose.
Rather, further emails arrived – from the imposter – confirming payment to the bank account nominated and to the different payee.
The buyer then authorised a NAB telegraphic transfer to the actual seller, Kong Ah International but specifying the fraudsters nominated bank account details . The NAB declined the transfer because the beneficiary details did not match the account number. The buyer then re-submitted the transfer request substituting the impersonator specified entity for the seller’s name, which allowed the transfer to the fraudster’s account to be successfully completed.
Kong Ah remained unpaid when goods arrived in Australia in the custody of the carrier. It seller refused to authorise the release the goods.
The seller’s lawsuit against the buyer was defended on the basis that it had owed a duty to guard against misdirecting emails intended for the buyer, and in particular preventing its email account being accessed by unauthorised persons, for example by providing the email account password to employees.
But the originator of the fraud could not be established. An expert investigator found that the impersonator’s emails had come from an IP address in Nigeria but that it was possible for an IP address from elsewhere, including the People’s Republic of China, to be forged to appear to be from a Nigerian account.
The court found that Kong Ah had no part in the fraud and that title in the goods hade not passed to the buyer by virtue of the terms of the contract between them.
The seller was granted specific performance of the sale of goods contract, resulting in an order that the buyer must pay the full purchase price of $163,000 for receipt of the goods.