Partially upheld: scam/fraud - failure to prevent foreseeable harm through inadequate fraud monitoring and intervention complaint against Zempler Bank Limited

Decision detail

Summary

Mr M, trading as D, complained that Zempler Bank Limited refused to reimburse four card payments totalling over £18,000 made following a scam where the additional cardholder was manipulated into sharing one-time passcodes. Although the payments were technically authorised through 3DS authentication, the ombudsman found that Zempler should have identified heightened fraud risk by the third payment (over £10,000 to a luxury brand, made in rapid succession with others) and intervened to prevent further loss. The ombudsman upheld the complaint in part, ordering Zempler to reimburse 50% of payments three and four (£5,922.96) plus 8% interest, holding the additional cardholder 50% responsible for sharing OTPs despite warning messages and suspicious circumstances.

The Ombudsman's reasoning

While the payments were technically authorised, Zempler had a responsibility under regulatory expectations and good industry practice to identify heightened fraud risk and intervene. The ombudsman found that by payment three, the combination of out-of-character spending, high value, and rapid succession of payments should have triggered intervention. The ombudsman concluded that if Zempler had declined payment three and contacted the account holder, the scam would have been discovered and prevented further loss. However, the additional cardholder bore some responsibility for sharing OTPs despite warning messages and the suspicious nature of being asked to make multiple payments rather than a lump sum transfer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website