An email scam cautionary tale
By Nancy Rubin, K.C. and Levi Parsche
What happens if a person accidentally makes payment to a hacker, instead of to the person they actually owe money? Should they have to pay again? In the recent decision, Jane Group Limited v. Heritage Gas Limited, 2022 NSSM 36, a small claims court adjudicator said yes.
EFT Payment Scam
In the case, two companies had agreed to split the costs to repair a sidewalk after a natural gas line was installed. Shortly after the repairs were completed, Jane Group emailed Heritage Gas seeking payment of its share. Heritage Gas responded, requesting an invoice for the repairs, and indicated it could pay by electronic funds transfer (“EFT”) or via cheque. So far, so good.
Then, Heritage Gas received what it assumed was a response from Jane Group, providing banking information and instructions to send payment via EFT. Unfortunately, this email was actually from an online hacker who had intercepted previous communications. The hacker, representing themselves as the Jane Group president, provided information for a fraudulent bank account, and asked for the money to be deposited that same day.
Heritage Gas emailed Jane Group again indicating it needed an invoice before it could make a payment. In response, (and from a different email address) Jane Group provided an invoice, which indicated payment should be made by cheque to a mailing address.
Unfortunately, upon receipt of the invoice, Heritage Gas followed the earlier EFT instructions that had been sent, depositing the payment into the fraudulent bank account provided by the hacker.
Decision
Having not received payment, Jane Group sued for recovery from Heritage Gas. Counsel for Jane Group argued that there were several “red flags” in the email from the hacker (spacing and typographical errors) which should have triggered a follow-up by Heritage Gas, not to mention the discrepancy in the direction to pay via EFT or cheque.
On the other hand, counsel for Heritage Gas argued that the loss of money was due to Jane Group’s “carelessness” and lack of cybersecurity.
In the end, Adjudicator Darling found that both parties were innocent victims of the hacker and ruled that as neither party had exhibited blameworthy conduct, the case must be decided in favour of the Claimant, Jane Group.
Key Takeaway
As we move towards an increasingly digital world, this case serves as a reminder to keep an eye out for fraudulent activity. Take extra steps to make sure your electronic funds transfers are secure. Watch out for email red flags (typos, suspicious links, misspellings, a sense of urgency) and confirm payment details via an additional method – otherwise you might end up on the hook and have to pay twice!
This update is intended for general information only. If you have questions about the above, please contact the authors.
Click here to subscribe to Stewart McKelvey Thought Leadership.
Archive
By Jennifer Taylor Introduction There is now a Nova Scotia decision on the interplay between the provincial Builders’ Lien Act and the federal Bankruptcy and Insolvency Act (“BIA”) in the interesting context of trusts. In Re Kel-Greg Homes Inc, Justice Rosinski…
Read MoreThe New Brunswick government is seeking feedback from stakeholders on proposed changes to the Employment Standards Act (“Act”). The proposed changes relate to: – the statutory minimum wage; – employment protections for young workers; and – coverage…
Read MoreOCTOBER 19, 2015 – FEDERAL ELECTION A Federal election has been called for Monday, October 19, 2015. Polls are open in Atlantic Canada from 8:30 a.m. to 8:30 p.m. Advance polls are open from…
Read MoreAs of August 1, 2015, section 4 of the Nova Scotia Automobile Tort Recovery Limitations Regulations was repealed. This section previously set the discount rate for future losses in automobile tort claims at 3.5%. The repeal…
Read MoreOn September 9, 2015, the Nova Scotia Department of Finance and Treasury Board opened a consultation on draft Regulations for Pooled Registered Pension Plans (PRPPs). The draft Regulations and an FAQ are posted online. PRPPs are…
Read MoreBy Jennifer Taylor – Research Lawyer September used to mean one thing: back to school. This year, Nova Scotia lawyers get a fresh learning opportunity of a different sort. It comes in the form of the new Limitation…
Read MoreTHE EDITORS’ CORNER Michelle Black and Sean Kelly Aaah, summer – that long anticipated stretch of lazy, lingering days, free of responsibility and rife with possibility. It’s a time to hunt for insects, master handstands, practice swimming…
Read MoreThe New Public Contracting World As part of an ongoing initiative aimed at ensuring Canada only does business with ethical suppliers, Public Works and Government Services Canada (“PWGSC”) has introduced changes to its Integrity Regime…
Read MoreIn an important case for insurance practice in Nova Scotia, the Court of Appeal has confirmed that the value of future CPP disability benefits is deductible under the SEF 44 family protection endorsement. Justice Scanlan wrote the…
Read MoreIn order to streamline the continuous disclosure obligations of venture issuers, the Canadian Securities Administrators (“CSA”) are implementing amendments to the national instruments and companion policies listed below, that will come into force across Canada…
Read More