Not upheld: Fraud reimbursement (APP scams) complaint against Starling Bank Limited

Decision detail

Summary

Miss S complained to Starling Bank after losing £9,400 in payments to an auction house B for a property purchase, following discovery that the seller lacked legal right to sell the property. Miss S alleged B and the seller had the same director and intended to defraud her from the outset. The ombudsman found that B was a legitimate, properly regulated business with positive reviews and verification from Miss S's own solicitors and a consumer watchdog programme. The ownership issue was determined to be a civil dispute rather than fraud by B. As the payment did not constitute an authorised push payment scam under the CRM Code, the ombudsman did not uphold the complaint and declined to order reimbursement by Starling Bank.

The Ombudsman's reasoning

The ombudsman applied the CRM Code definition of an APP scam, which requires that the very purpose for which the payment was procured was different to what the customer believed due to dishonest deception. The evidence demonstrated that B was a genuine business, not set up as a scam company, and did not set out to defraud Miss S. The ownership issue was a civil dispute between the parties to the property transaction, not a scam perpetrated by B. Therefore, the payment did not meet the definition of an APP scam under the CRM Code, and Starling had no obligation to reimburse.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website