Not upheld: unauthorised payment / scam / fraud complaint against Starling Bank Limited

Decision detail

Summary

Miss M complained that Starling Bank Limited failed to refund a £937.22 payment she disputed after being targeted by a scammer who impersonated the bank. The scammer convinced her to move funds into her account and then instructed her to transfer money to a currency exchange merchant, claiming it would be returned. When Miss M opened the Starling app to verify the scammer's legitimacy, she discovered the payment had already been processed. Starling refused to refund the payment, stating it had been authorised through the app's stronger authentication process. The ombudsman upheld Starling's position, finding that Miss M had completed the required authentication steps on her trusted device, which constituted valid authorisation under the Payment Services Regulations 2017, and that being deceived about a payment's purpose does not render an authenticated payment unauthorised.

The Ombudsman's reasoning

Under the Payment Services Regulations 2017, a payment is authorised if it was correctly authenticated and the consumer consented to it. The ombudsman found that Miss M completed the stronger authentication process in Starling's app on her trusted device, which constituted authorisation. The concept of consent under the PSRs is an objective test and does not require informed consent about the payment's purpose or destination. Being tricked into approving a payment does not make it unauthorised under the PSRs. Starling was not required to intervene as the payment value was not unusually high or out of character, and a chargeback would have been unsuccessful as the payment was authorised and made to a legitimate merchant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website