Upheld: unauthorized transactions and liability for fraudulent payments complaint against ClearBank Limited (Tide)

Decision detail

Summary

Mr N, director of O, complained that Tide declined to refund disputed transactions made via Apple Pay using his device and security credentials without his authorization. Tide argued Mr N breached account terms by failing to keep his device passcode secure and storing sensitive information on his device. The ombudsman found that the disputed transactions were unauthorized, as Tide could not demonstrate Mr N's consent or which authentication method was used. The ombudsman determined that the relevant account terms clause 10.7 referred to the Tide platform passcode, not the device passcode, and that Mr N's conduct did not constitute gross negligence under the Payment Services Regulations 2017. Accordingly, the ombudsman upheld the complaint and directed Tide to refund the disputed transactions plus 8% simple interest.

The Ombudsman's reasoning

The ombudsman applied the Payment Services Regulations 2017, which establish that a customer is responsible for authorized payments but not unauthorized payments. For a payment to be authorized, the firm must show it was authenticated correctly and the customer consented to it. The ombudsman found that Tide failed to demonstrate Mr N authorized the transactions. While Mr N's device and credentials were used, the ombudsman found he did not breach the account terms because clause 10.7 refers to the Tide platform passcode, not the device passcode. The ombudsman applied the elevated threshold of gross negligence from case law, finding that storing information on a passcode and biometric-protected device, while potentially negligent, does not reach the level of gross negligence required to hold Mr N liable. The ombudsman was satisfied that Mr N was tricked into disclosing his passcode while using his device in public, which is normal device usage.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website