Not upheld: fraud claim refusal / APP scam coverage complaint against HSBC UK Bank Plc trading as first direct

Decision detail

Summary

Mr H paid £5,489.51 to company O in June 2025 for a computer via bank transfer but never received the goods or a refund. O has since ceased trading. Mr H claimed the payment was a fraud loss and requested reimbursement from HSBC, which declined on the basis that it was a civil dispute. The ombudsman upheld HSBC's decision, finding that the payment does not constitute an APP scam under the Reimbursement Rules because Mr H paid the intended recipient for the intended purpose, and there is insufficient evidence of fraudulent deception by O. The situation is a private civil dispute between Mr H and O, which falls outside the scope of the Reimbursement Rules. Minor service failures by HSBC, including missing case references and an incorrect transaction date, do not warrant compensation.

The Ombudsman's reasoning

The Reimbursement Rules only cover APP scams where fraudulent deception was used to obtain funds. An APP scam requires either that the recipient is not who the consumer intended to pay, or the payment is not for the purpose intended. The Rules explicitly exclude private civil disputes, defined as disputes between a consumer and payee where a customer has paid a legitimate supplier but has not received goods or services. Here, Mr H paid the intended recipient (O) for the intended purpose (a computer). While O failed to deliver the goods and has ceased trading, this constitutes a civil dispute rather than an APP scam. The evidence does not prove O set out with the intention to defraud Mr H from the outset. The burden is on Mr H to provide evidence of fraudulent deception, which is more appropriately obtained through court proceedings or formal investigation. Offering a discount for bank transfer does not amount to fraudulent deception. The minor service failures by HSBC (missing case references and incorrect date) do not warrant compensation and do not undermine HSBC's fair assessment of the claim.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website