Not upheld: Fraud reimbursement (APP scams) complaint against Modulr FS Limited

Decision detail

Summary

Mrs B complained that Modulr failed to protect her from a scam involving two card payments totalling over £4,000 to a web services company (D) routed through a payment processor (C) in June 2024. Modulr attempted a chargeback which was defended and declined by C. The ombudsman found that while Modulr should have questioned the unusual payment pattern, such questioning would not have prevented the loss as D appeared to be a legitimate UK registered company with professional documentation. The chargeback could not succeed because C properly defended it by showing it had performed its service as a payment processor. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while Modulr should have intervened and asked questions about the unusual payments, such intervention would not have prevented the loss because all available information suggested D was a legitimate investment. The scam was sophisticated and would not have been uncovered by standard questioning. Additionally, Modulr could not recover the funds through chargeback because C (the payment processor) properly defended the claim by demonstrating it had performed its contracted service of forwarding funds to D. The chargeback could not be raised directly against D.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website