Upheld: Fraud reimbursement (APP scams) complaint against Caxton Payments Limited

Decision detail

Summary

Mr W complained that Caxton Payments Limited refused to refund approximately £3,500 in fraudulent transactions on his foreign currency account. A fraudster hacked the account in April 2021, changed the login details, ordered a new card to their address, and used it for rapid UK spending that drained the account. Mr W discovered the fraud in September 2023 when he tried to access the account for his first holiday since the pandemic and reported it immediately. Caxton refused to refund based on late reporting under chargeback rules. The ombudsman upheld the complaint, finding the transactions were clearly unauthorised and that fairness required setting aside the time limit given the exceptional pandemic circumstances and Caxton's failure to detect the obvious fraud indicators. Caxton was directed to refund all disputed payments plus interest and fees.

The Ombudsman's reasoning

The ombudsman found that while the Payment Services Regulations normally require reporting within 13 months, fairness and reasonableness required departing from this strict time limit in the exceptional circumstances. The account was dormant due to the unprecedented global pandemic, making it reasonable for Mr W not to access it. Caxton failed to flag the highly suspicious fraudulent activity despite their obligation to monitor for fraud. The spending pattern was clearly indicative of fraud and should have triggered Caxton's fraud detection systems. Since Caxton accepted the payments were unauthorised and the delay did not prejudice their ability to defend against authorisation claims, the time limit should be set aside.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website