Not upheld: scam claim / APP fraud / defective goods complaint against HSBC UK Bank Plc

Decision detail

Summary

Ms T purchased a car for £1,995 from seller E, with payment made to company L's bank account. Shortly after driving the car away, the engine failed catastrophically. Ms T complained to HSBC that she had been scammed, but HSBC declined to refund her, classifying the matter as a civil dispute. The ombudsman upheld HSBC's decision, finding that although the car was defective, the transaction did not meet the definition of an Authorised Push Payment (APP) scam under the Faster Payments Scheme Reimbursement Rules. The ombudsman noted that Ms T paid the intended recipient for the intended purpose, and that the Trade Sales Invoice explicitly stated the car was sold 'as spares or repairs', supporting transparency rather than fraud. The ombudsman concluded that the evidence did not convincingly demonstrate that the seller intended to defraud Ms T, and that any claim regarding defective goods would need to be pursued against the seller under consumer protection legislation, not against HSBC.

The Ombudsman's reasoning

The ombudsman applied the Faster Payments Scheme Reimbursement Rules definition of an APP scam, which requires either that the recipient is not who the consumer intended to pay, or the payment is not for the purpose intended. Ms T paid the intended recipient (L) for the intended purpose (to buy a car). While the car was defective, receiving goods in poor condition does not constitute an APP scam under the Reimbursement Rules. The ombudsman found that fraud requires convincing evidence that it is the most probable explanation, applying the civil standard of balance of probabilities. The Trade Sales Invoice stating the car was sold 'as spares or repairs' supported the notion that L was transparent about the vehicle's condition. The ombudsman noted that poor customer service and non-responsiveness, while potentially hallmarks of a scam, have other possible explanations including incompetence or misunderstanding. The beneficiary bank account showed no indicators of fraudulent activity typical of scams. The ombudsman concluded that fraud was not the most probable explanation and that the matter constitutes a private civil dispute regarding goods quality, which is specifically excluded from the Reimbursement Rules.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website