Not upheld: fraud - investment scam; failure to prevent authorised push payment fraud complaint against Nationwide Building Society

Decision detail

Summary

Miss C complained that Nationwide Building Society should refund £3,584.48 she lost to an investment scam after making two card payments in February 2021 to a cryptocurrency account in her own name. She argued the payments represented a significant change in account activity that should have triggered fraud alerts. The ombudsman found the payments were indeed lost to a scam but upheld Nationwide's decision not to refund, concluding the firm had no reasonable grounds to suspect fraud given the relatively low amounts, Miss C's previous similar transactions, and the less-established connection between cryptocurrency and scams at that time. The ombudsman also noted Miss C could not recover the funds through the chargeback scheme as she reported the scam years later, after the claim deadline had expired.

The Ombudsman's reasoning

The ombudsman applied the legal principle that firms must process authorised payments in accordance with Payment Services Regulations, but recognised exceptions where firms should look beyond face value at wider circumstances. The ombudsman concluded that while Nationwide has duties to exercise reasonable skill and care and identify vulnerable consumers, the payment amounts were relatively low, the cryptocurrency connection was not well-established as a scam indicator in February 2021, and Miss C had made similar payments previously without issue. Therefore, Nationwide had insufficient grounds to suspect fraud at the time of processing. Even if fraud risk should have been identified, a scam warning would likely not have deterred Miss C given her trust in the friend's recommendation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website