Not upheld: scam reimbursement claim - investment fraud complaint against Monzo Bank Limited

Decision detail

Summary

Mr S complained that Monzo Bank Limited refused to refund £2,026.40 he lost to an investment scam. Mr S had made three bank transfers to his friend W, who exchanged the money and credited it to Mr S's account with trading platform C. When the investment proved fraudulent, Mr S claimed reimbursement under APP scam rules, but Monzo treated it as a civil dispute. The ombudsman upheld Monzo's decision, finding that although Mr S was ultimately scammed by platform C, the payments met the intended recipient and purpose, and W was likely also a victim of C's referral-based scheme rather than acting with fraudulent intent. Therefore, the circumstances did not meet the definition of an APP scam under FPS reimbursement rules.

The Ombudsman's reasoning

The ombudsman applied the FPS reimbursement rules definition of an APP scam, which requires either that the recipient is not who the consumer intended to pay, or the payment is not for the purpose intended. Here, Mr S paid W (the intended recipient) for the purpose of investing in platform C (the intended purpose). Although Mr S ultimately lost money to C's investment scam, the ombudsman found that W was likely also a victim of C's scam rather than acting with fraudulent or dishonest intent. The longstanding personal relationship between Mr S and W, combined with the referral structure of C's scheme, supported the conclusion that this was a civil dispute between Mr S and the investment platform C, not an APP scam involving deception by W.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website