Not upheld: Authorised Push Payment (APP) scam reimbursement claim complaint against Santander UK Plc

Decision detail

Summary

Mr A paid £4,500 to company D as a deposit for a made-to-order diamond stone following weeks of communication. When delays and grading issues arose, D offered an alternative stone, which Mr A later discovered was held by a different company in another country. After Mr A offered to pay the remaining balance in cash locally, D called off the deal and made the refund conditional on return of the grading report. Mr A claimed this was an APP scam and sought reimbursement from Santander. The ombudsman found that while D's conduct was unprofessional, there was insufficient evidence to prove fraudulent intent from the outset, and the matter appeared to be a private civil dispute rather than a criminal scam. Santander's refusal to reimburse was therefore fair.

The Ombudsman's reasoning

The ombudsman applied the APP scam definition from the reimbursement rules, which requires either that the recipient was not who the consumer intended to pay, or that the payment was not for the purpose intended. Mr A paid who he intended to pay, so the first element did not apply. For the second element, the ombudsman would need convincing evidence that D intended to defraud Mr A from the outset. The ombudsman found that while D's conduct may have been unprofessional, the evidence did not conclusively show fraudulent intent. The possibility that the made-to-order stone was completed in good faith, that D sourced a replacement stone but the relationship broke down, or that D engaged in poor practices, were all plausible explanations. The receiving bank's information did not show common hallmarks of criminal fraud. On the balance of probabilities, fraud was not the most likely explanation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website