Not upheld: unauthorised transactions / fraud prevention complaint against Kroo Bank Ltd

Decision detail

Summary

Mr M complained that Kroo Bank Ltd allowed unauthorised transactions on his account after he fell victim to a sophisticated scam. A fraudster claiming to be from the FCA convinced Mr M that his account was unsafe and persuaded him to approve two payments (£629 and £161.99) through his mobile banking app to transfer funds to what he believed was a safe account. The ombudsman found that although Mr M was the victim of a cruel scam, he knowingly authenticated the payments using his security credentials, making them authorised under the Payment Services Regulations 2017. The ombudsman concluded that Kroo was not required to intervene before processing the payments or attempt chargeback recovery, and therefore did not uphold the complaint.

The Ombudsman's reasoning

Under the Payment Services Regulations 2017, the starting point is that customers are liable for authorised payments and firms are liable for unauthorised payments. Although Mr M was the victim of a scam and did not intend to send money to a third party, he knowingly approved the payments through his mobile banking app using his security credentials. The ombudsman found it reasonable for Kroo to treat the payments as authorised based on Mr M's authentication, as the reasons for making the payments, his understanding of the circumstances, or whether he appreciated the funds would be permanently lost are not relevant factors under the PSRs for determining consent. Regarding fraud prevention, the ombudsman was not persuaded that the declined £0.00 transactions and payment amounts were suspicious enough to warrant Kroo intervening before processing the payments. Regarding recovery, a chargeback would have been unlikely to succeed given how the payment was authenticated and that the merchant appeared to be genuine.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website