Not upheld: Authorised Push Payment (APP) scam - failure to prevent or recover funds complaint against Yorkshire Building Society

Decision detail

Summary

Mrs C lost £61,000 from her YBS savings account to an investment scam orchestrated by J between August 2021 and March 2022, with an additional £30,000 lost from another bank account. J convinced Mrs C he was legitimate through a television appearance, social media presence, in-person meetings, and a prior investment that returned profit. YBS declined to refund the losses, but offered £300 compensation for poor customer service. The ombudsman found that while YBS should have questioned the first unusually large payment to a new payee, proportionate intervention would likely not have prevented the scam given J's sophisticated deception and Mrs C's reasonable belief in his legitimacy. The complaint was not upheld, but the £300 compensation for poor customer service was deemed fair.

The Ombudsman's reasoning

While YBS should have questioned Mrs C about the first £25,000 payment as it was unusual and out of character, the ombudsman was not persuaded that proportionate intervention would have prevented the payment. J had created a sophisticated illusion of legitimacy through his television appearance, social media presence, in-person meetings with Mrs C, and a prior successful investment that returned profit. Mrs C had no reason to suspect fraud and would likely have explained these factors to YBS if questioned. Even investment scam warnings would not have resonated given the apparent legitimacy of the scheme. For the third £35,000 payment, although YBS should have questioned Mrs C, she had already received repayment of her first investment plus profit, further convincing her of J's legitimacy, so questioning would likely not have prevented the payment. The name mismatch warning, even if available, would not have stopped Mrs C as Bank B's warnings did not deter her. Once aware of the scam, YBS could not recover funds as J's account was empty and he had been made bankrupt.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website