Not upheld: scam reimbursement claim under CRM Code complaint against Starling Bank Limited

Decision detail

Summary

Mr W complained that Starling Bank Limited refused to refund payments he made as part of what he believed was a scam involving Person A and Company A, a water business. Mr W had invested in and become a partner in Company A, making various payments for its operation, but later became concerned he was a victim of fraud. Starling investigated but declined to reimburse, classifying it as a civil dispute. The ombudsman found insufficient evidence of an APP scam under the CRM Code, as the evidence did not demonstrate dishonest deception and suggested Company A was a legitimate but failed business. The ombudsman concluded this was a civil matter and that Starling had no obligation to prevent the payments, ultimately not upholding the complaint.

The Ombudsman's reasoning

The ombudsman applied the CRM Code definition of an APP scam, which requires payment to another person for what they believed were legitimate purposes but which were in fact fraudulent. The ombudsman found that the evidence did not sufficiently demonstrate dishonest deception by Person A or that funds were not used for their intended purpose of operating Company A. The absence of contracts made it difficult to determine if any agreement was breached. The ombudsman noted that while fraudulent businesses may initially operate legitimately, many businesses fail for genuine reasons, and the evidence did not persuade that Company A was set up with intent to defraud. Person A's solicitor refuted fraud allegations. The ombudsman concluded this was a civil dispute between Mr W and Company A rather than an APP scam, and that Starling had no obligation to prevent payments based on the information available at the time, which suggested Company A was operational and conducting genuine business activities.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website