Not upheld: advance fee scam - partial reimbursement under CRM Code complaint against Starling Bank Limited

Decision detail

Summary

Mr J lost £220 to an advance fee scam after being offered a personal loan online and told he needed to pay upfront to improve his credit score. Starling Bank initially refused reimbursement but later offered 50% refund plus interest and compensation under the CRM Code, accepting it had failed to provide an effective warning. Mr J complained to the FOS seeking full reimbursement, arguing Starling should bear the full loss. The ombudsman upheld Starling's 50% reimbursement decision, finding that despite the bank's breach of CRM Code standards, Mr J should have reasonably questioned the legitimacy of the payment given multiple warning signs including the unfamiliar company, unusual upfront payment request, and payment to a personal account rather than a business account.

The Ombudsman's reasoning

Although Starling breached the Standards for Firms by failing to provide an effective warning, the evidence supports that Mr J made the payment without a reasonable basis for belief in its legitimacy. Multiple warning signs existed: the company was unfamiliar with no verifiable online presence, the upfront payment request was highly unusual and unexplained, Mr J expressed discomfort but proceeded anyway, and the payment went to a personal account of an unknown individual despite being told it was a business account. Under the CRM Code, when a bank breaches Standards and an exception applies, 50% reimbursement is appropriate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website