Not upheld: scam protection and fraud recovery complaint against Santander UK Plc

Decision detail

Summary

Mr and Mrs K complained that Santander failed to protect them from a scam involving fraudulent airline ticket purchases and failed to recover their funds. They discovered the scam when the airline confirmed no booking existed. Santander declined the claim, citing customer authorisation of the payment, and a chargeback attempt failed because the merchant proved services were provided. The ombudsman upheld Santander's position, finding the payment presented no heightened fraud risk at the time of transaction and that the chargeback scheme rules did not permit recovery where services were technically provided, even if not to the intended recipient.

The Ombudsman's reasoning

The ombudsman applied the legal starting position that banks must process authorised payments in accordance with Payment Services Regulations. Although good industry practice requires fraud monitoring, the payment value and nature did not present unusual or out-of-character activity that would have alerted Santander to potential fraud at the time of transaction. The chargeback scheme, while a legitimate recovery route, does not cover scenarios where the merchant has technically fulfilled the contract terms by providing the service, even if not to the intended recipient. Santander followed correct chargeback procedures by waiting until the delivery date (flight date) to raise the dispute under the appropriate chargeback code.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website