Not upheld: scam claim / APP fraud reimbursement complaint against HSBC UK Bank Plc trading as first direct

Decision detail

Summary

Ms N paid £1,300 to building company D for foundation pouring and conservatory frame installation, with an agreed total of £4,000. After D requested advance payments and work progressed slowly, the job was cancelled and D threatened to destroy completed work unless paid. Ms N claimed this was an APP scam and requested HSBC refund the payments. HSBC declined, classifying it as a civil dispute. The ombudsman upheld HSBC's decision, finding that although the service was poor and incomplete, the payments were made to the intended recipient for the intended purpose, making this a contractual dispute rather than fraud 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. The ombudsman found that Ms N's payments went to the person she intended to pay (D) and for the purpose she intended (building works). Although the work was of poor quality and incomplete, and the relationship broke down, this indicated a civil dispute rather than fraud. The ombudsman noted that scammers typically attend sites briefly and carry out minimal work, whereas D attended multiple times and progressed work over time. The absence of invoices, online presence, and use of personal accounts are not unusual for small building trade sole traders.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website