Not upheld: scam claim / refund request under Faster Payments Scheme Reimbursement Rules complaint against Santander UK Plc

Decision detail

Summary

Mr and Mrs S paid a private tutor company £340 and £280 in advance for tutoring lessons for their daughter. The first payment resulted in lessons being delivered, but after the second payment, the tutor exhibited unprofessional behaviour and refused to provide a refund when Mr and Mrs S cancelled. Mr and Mrs S claimed they were victims of a scam and sought reimbursement from Santander under the Faster Payments Scheme Reimbursement Rules. Santander declined, treating it as a civil dispute. The ombudsman upheld Santander's decision, finding insufficient evidence that the tutor intended to defraud Mr and Mrs S from the outset, as the first lessons were delivered and the second payment's non-delivery resulted from post-payment communication breakdown rather than fraudulent intent.

The Ombudsman's reasoning

The ombudsman applied the definition of an APP scam under the Reimbursement Rules, which requires that either the recipient was not who the consumer intended to pay, or the payment was not for the purpose intended. Since Mr and Mrs S paid the intended recipient (the tutor company) and both payments were intended for tutoring lessons, the key question was whether the tutor intended to defraud them. The ombudsman found insufficient evidence of fraudulent intent from the outset. The first payment resulted in lessons being delivered, and the second payment's non-delivery resulted from a breakdown in communication after payment, not from pre-planned fraud. Poor business practice and refusal to refund do not constitute evidence of fraud.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website