Not upheld: scam/fraud - refund of authorised payments complaint against NewDay Ltd

Decision detail

Summary

Mr U fell victim to an employment scam that required him to make initial payments via his NewDay credit card to access further tasks. He made four payments totalling £2,260.38 to a cryptocurrency exchange, which converted the funds and transferred them to fraudsters. Mr U requested a refund from NewDay, which declined. The ombudsman found that while Mr U was misled and did not give informed consent, the payments were authorised and not sufficiently unusual to trigger fraud monitoring. NewDay's chargeback attempt also failed because the cryptocurrency exchange correctly defended the claim. The complaint was not upheld.

The Ombudsman's reasoning

While Mr U was misled and did not give informed consent, the legal position is that authorised payments must be processed. Good industry practice requires monitoring for unusual transactions, but these payments were not sufficiently out of character or unusual to trigger fraud concerns given the account's historical usage. The payments were made to an established payee (cryptocurrency exchange in Mr U's own name), which provided reassurance. The chargeback failed because the cryptocurrency exchange correctly defended the claim - it had provided the service contracted for (currency conversion), with subsequent unauthorised actions taken by Mr U himself.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website