Not upheld: scam protection and fraud prevention complaint against Starling Bank Limited

Decision detail

Summary

Mr Z lost £138 to a purchase scam after making an international payment via his Starling account for shoes advertised on social media. The seller failed to deliver and requested additional taxes, revealing the scam. Starling refused to refund the payment, citing its low value and risk profile, though they did contact the beneficiary bank for recovery (unsuccessful) and paid £50 for customer service delays. The ombudsman upheld Starling's position, finding the transaction was not unusual enough to warrant additional checks beyond the fraud warning Mr Z acknowledged, and that the bank acted reasonably in attempting recovery after being notified of the scam.

The Ombudsman's reasoning

The ombudsman applied the Payment Services Regulations 2017 framework, establishing that Mr Z authorised the payment and was presumed liable in the first instance. The key question was whether the transaction was unusual enough to warrant additional checks. The ombudsman found the £138 international payment was not of a value or nature that would typically trigger heightened fraud concerns, particularly as international transactions are common. The ombudsman balanced the need for fraud protection against the practical necessity for banks to process transactions without excessive friction. The fraud warning provided by Starling was deemed appropriate and sufficient. The ombudsman also found that the delay in complaint registration did not impact recovery efforts, as the beneficiary bank was contacted immediately on the day the scam was reported.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website