Not upheld: scam refund claim under APP Reimbursement Rules complaint against Starling Bank Limited

Decision detail

Summary

Mr F paid £688.77 as a deposit for student accommodation after responding to an advertisement and signing a tenancy agreement with Miss A, acting on behalf of property company S. When he arrived to move in, he was told there was no record of his tenancy, and Miss A subsequently blocked him. Mr F reported this as a scam to Starling Bank, which declined his refund claim, determining it was a private civil dispute rather than an APP scam. The ombudsman upheld Starling's decision, finding that S was a legitimate business, Mr F paid the intended recipient for the stated purpose, and there was insufficient evidence of criminal fraud to meet the legal threshold for an APP scam under the Reimbursement Rules.

The Ombudsman's reasoning

The ombudsman applied the Faster Payments Scheme and CHAPS Reimbursement Rules definition of an APP scam, which requires criminal deception. The ombudsman found that: (1) Mr F paid the intended recipient (S), a legitimate business; (2) the payment was for the stated purpose (tenancy); (3) S's bank records show normal business activity; (4) the tenancy agreement appears legitimate; (5) there is no persuasive evidence of fraud; and (6) there are many non-fraudulent reasons why a legitimate business might fail to deliver services. The ombudsman concluded this was a private civil dispute between Mr F and S, not covered by the Reimbursement Rules. The ombudsman also found that Mr F's vulnerability would only be relevant if the payment was covered by the Reimbursement Rules, which it was not.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website