Not upheld: fraud claim refusal - scam payments complaint against PayPal UK Ltd

Decision detail

Summary

Mr T claimed PayPal should refund 24 payments made between March and June 2025 to an individual who allegedly scammed him by not providing Certificates of Sponsorship. PayPal declined the refund citing their Buyer Protection Scheme exclusion for 'friends and family' payments. The ombudsman found that all payments were funded by third-party credits, meaning Mr T suffered no financial loss and the third parties were the actual victims. Additionally, Mr T received financial benefit on some transactions, was dishonest about payment purposes, and circumvented bank fraud warnings, demonstrating he would likely have ignored PayPal warnings as well. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Mr T did not suffer a financial loss because all payments were funded by third-party credits, meaning the third parties were the actual victims. Additionally, the payments were made using 'friends and family' purpose which is explicitly excluded from PayPal's Buyer Protection Scheme. Even if PayPal had intervened, Mr T demonstrated dishonesty about payment purposes and ignored bank warnings by circumventing fraud detection, suggesting he would not have been honest with PayPal or heeded their warnings. The evidence shows Mr T received financial benefit on at least some transactions, making a refund unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website