Partially upheld: Fraud reimbursement (APP scams) complaint against Clydesdale Bank Plc

Decision detail

Summary

Mrs M fell victim to a sophisticated scam where a fraudster posing as a police officer collected her card and PIN, leading to three disputed transactions totalling £44,288 (one reversed, two successful). The ombudsman found Mrs M authorised the £16,840 transaction as she was present at the merchant, but did not authorise the £4,998 electronics store transaction. Although Mrs M breached her security obligations by intentionally disclosing her credentials, Virgin Money should have detected the unusual pattern of activity (over £45,000 credited followed by £21,838 spent within 24 hours) and blocked the card before the third transaction. The ombudsman upheld the complaint in part, ordering a 50% refund of £2,499 for the third transaction, applying contributory negligence to Mrs M for failing to verify the fraudster's legitimacy.

The Ombudsman's reasoning

The ombudsman found that Mrs M intentionally disclosed her card and PIN to the fraudster, albeit under deception, which constituted a breach of her obligation to keep security credentials safe under the Payment Services Regulations 2017. However, the ombudsman determined that Virgin Money should have monitored the account for unusual activity and intervened before the third transaction (£4,998) was processed, as by that point there was an emerging pattern of unusual transactions within 24 hours facilitated by a large credit. The ombudsman applied contributory negligence to Mrs M's actions (failing to verify the fraudster's legitimacy, not asking for photo ID, not contacting police beforehand) and apportioned 50% liability to her, resulting in a 50% reduction of the refund for the third transaction only.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website