Not upheld: Authorised Push Payment (APP) scam - refund claim under Faster Payment Scheme Reimbursement Rules complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr C paid Company A £40,270 between May and June 2025 for renovation works including a garage conversion, carpets, flooring, windows, doors, roof repairs, and a kitchen. Company A began work but failed to deliver materials, provided unsafe work non-compliant with building regulations, and did not provide the requested refund when Mr C terminated the agreement. Mr C complained to HSBC claiming he was the victim of an APP scam, but HSBC declined to reimburse him, characterising it as a civil dispute. The ombudsman considered whether the payments met the definition of an APP scam under the Faster Payment Scheme Reimbursement Rules. While the circumstances shared some hallmarks of a rogue trader scam, the beneficiary bank statements showed transactions consistent with a genuine building company, positive customer reviews existed, and funds were not immediately removed. The ombudsman concluded that on the balance of probabilities, it was not more likely than not that Company A intended to scam Mr C at the time of the payments, as opposed to being a poorly run business, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied the Faster Payment Scheme Reimbursement Rules definition of an APP scam, which requires that a person used fraudulent or dishonest conduct to manipulate, deceive or persuade a consumer into transferring funds where either the recipient was not who the consumer intended to pay, or the payment was not for the purpose intended. Since Mr C intended to pay Company A and Company A was the recipient, the question was whether the payments were received for the same purpose Mr C intended. While Mr C's circumstances shared hallmarks of a rogue trader scam (materials not delivered, work unsafe and non-compliant, possible misrepresentation), the beneficiary bank statements showed transactions consistent with a genuine building company, including payments to builders' merchants and for wages/materials. The funds were not immediately removed as would be typical of a scammer. Company A had positive reviews and feedback from previous customers. The ombudsman concluded that while a scam was possible, it was not more likely than not that Company A intended to scam Mr C at the time payments were made, as opposed to being a poorly run business lacking skills or resources. The balance of probabilities did not favour the scam explanation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website