I paid my rental into the wrong bank account due to fraud! What do I do now?
My tenant paid the rental, but to a fraudulent account! What do I do now?
Payments are made by Electronic Fund Transfers (EFTs) on a daily basis. With the increase in the frequency and ease of EFT payments, we have seen an increase in associated fraud. Webb Attorneys was recently instructed to advise on this very issue.
The tenant received the rental invoice from the landlord via email, the date on the invoice was incorrect and the tenant requested that the landlord resend a revised invoice with the correct date. Within a few minutes, an updated invoice was sent to the tenant from the same email address, with the correct date, as well as a request to make all future payments to new banking details. The tenant proceeded to pay the rental to the new bank account. When the landlord had not received the monthly rental she followed up with the tenant for payment only to discover that it had been paid but into an account that was unknown to the landlord. . Investigations revealed that the emails had been intercepted and the banking details were traced to a third party who is not known by the landlord or the tenant.
So what next? Who is liable?
Is the tenant obligated to pay again, or should the landlord forfeit her monthly rental income?
The contractual basis for the landlord’s claim is the tenant’s contractual obligation to pay rental to the landlord as compensation for the use and enjoyment of the leased premises.
The tenant argued that they had made payment of the rental (the amount had left their bank account) and that the landlord was entitled, as per the lease, to change her bank account details via email, which “she” appeared to do.
The legal position
This dispute was heard by the Western Cape Rental Housing Tribunal. It found, as per our advice, that the tenant had not fulfilled its contractual obligation to pay the landlord, as payment had not been received by the landlord.
The Western Cape Rental Housing Tribunal highlighted the duty of a tenant (payor) and any debtor, to “seek out the creditor” and ensure that payment is received. Hence there is an obligation on any tenant/debtor to confirm whether the banking details for payment are correct.
In Galactic Auto (Pty) Ltd v Venter (4052/2017)  ZALMPPHC 27, Venter (the debtor) made payment into the wrong bank account as per an email sent by a hacker. Galactic Auto delivered the vehicle to Venter but did not receive payment from Venter. Furthermore, Venter benefited from the continued possession of the vehicle. Venter testified that he bona fide believed that the money was paid to Galactic Auto and received in their account. The Court found that:
“The Defendant failed to verify the banking details with Pulane [Plaintiff] before he made payment of the purchase price by way of EFT. The Defendant merely assumed that the e-mail with banking details attached to it came from Pulane” [para 49.2 of the judgement];
“The Defendant had in fact paid the money into a wrong and fraudulent account. He had been defrauded by hackers who stole his money after they have changed the banking details on the said e-mail” [para 49.3 of the judgement];
“If the Defendant had only verified the banking details with Pulane he would have prevented his loss. His failure to do so was at his own peril” [para 49.4 of the judgement];
“The principles to be applied in cases where payment has been intercepted and misappropriated by a thief have been concisely summarized by Nienaber J (as he then was) in Mannesmann Demag (Pty) Ltd v Romatex thus: When a debtor tenders payment by cheque, and the creditor accepts it, the payment remains conditional and is only finalised once the cheque is honoured… That risk is the debtor’s since it is the debtor’s duty to seek out the creditor” [para 51 of the judgement].
Here are some useful tips:
1. Check, check, check! Don’t take anything at face value. Scrutinise the email address, look for spelling and grammatical errors;
2. Many agreements contain a non-variation clause which provide that any and all changes to the agreement are to be made in writing and signed by all parties; ensure that your banking details cannot be changed simply by sending an email;
3. Ensure that your electronic device is up to date with malware;
4. Verify the bank account on your banking app or via online banking; and
5. Confirm the invoice and banking details or any change thereof sent via email by making a telephone call and/or sending a WhatsApp.
Where does this leave the tenant?
The tenant has been defrauded, which is not without recourse, but falls outside the ambit of the tenant/landlord relationship. The tenant would have to follow the bank’s fraud procedure and report the theft/fraud to SAPS.
While it is clear that it is the tenant’s responsibility to ensure that the banking details are correct and that the landlord receives the payment, we advise that all debtors and creditors be aware and triple-check before making payment. Contact Webb Attorneys for further assistance.
Written by Mpho Matubatuba and Chelsea Swanepoel (January 2023)