Not upheld: Fraud reimbursement (APP scams) complaint against Starling Bank Limited

Decision detail

Summary

Mrs C complained that Starling Bank should reimburse her £26,000 lost to an investment scam involving a person S and company M. She made three payments between June 2022 and May 2023 after being introduced to an investment opportunity and assured that S would manage the investments on her behalf. When the investment failed and a recovery opportunity also failed to materialise, Mrs C claimed this was an APP scam. Starling declined reimbursement under the CRM Code, treating it as a civil dispute. The ombudsman upheld Starling's decision, finding that while some scam indicators were present, the evidence did not support a conclusion that S/M had a settled intention to defraud Mrs C from the outset. The fact that funds were sent to a cryptocurrency account consistent with the stated investment purpose, combined with the absence of police reports or other substantive evidence of fraud, meant it was equally plausible this was a failed investment rather than fraud.

The Ombudsman's reasoning

The ombudsman applied the balance of probabilities test to determine whether Mrs C was the victim of fraud as defined in the CRM Code. The key issue was whether S/M had a settled intention to defraud Mrs C. The ombudsman found that while some behaviours described by Mrs C could be hallmarks of a scam (such as guaranteeing returns and promising recovery), these could equally be explained by S being overly optimistic. Critically, the evidence showed that funds from the third payment were sent to a cryptocurrency account, which was consistent with the stated purpose of investment rather than evidence of fraud from the outset. Without direct evidence of S's intentions and without the matter being raised with police, the ombudsman concluded it was equally plausible that both parties had aligned purposes for the payments - investment in cryptocurrency - and that the investment simply failed to deliver expected returns. Therefore, the evidence did not support a conclusion that this was a scam rather than a failed investment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website