Partially upheld: scam prevention - failure to intervene on cryptocurrency payments complaint against Bank of Scotland plc

Decision detail

Summary

Mr S fell victim to a cryptocurrency investment scam after responding to a social media advert. He made 14 payments totalling approximately £38,468 to a legitimate cryptocurrency exchange at the scammer's direction, ultimately losing all funds when unable to withdraw. The ombudsman found BoS should have intervened with a warning at the fourth payment (£4,995.02) as large cryptocurrency payments were unusual for Mr S and the bank knew of increased fraud risks. The complaint was partially upheld, requiring BoS to refund 50% of payments 4-14 plus interest, with the 50% reduction reflecting Mr S's contributory negligence in making large investments without independent advice or research.

The Ombudsman's reasoning

Although Mr S authorised the payments, banks have a duty to protect against fraud and undertake due diligence on large transactions. BoS should have been aware of the increased risk associated with cryptocurrency payments and the fact that large cryptocurrency payments were unusual for Mr S. A proportionate intervention at payment 4 would have been a tailored warning about common cryptocurrency scam aspects. Given the scam involved typical elements (social media ads, trading account setup, cryptocurrency transfers, requests for withdrawal fees), such a warning would likely have prevented the loss. However, Mr S bears 50% responsibility for contributory negligence as he made large payments based on a social media advert without independent advice or research.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website