Not upheld: investment scam - failure to prevent and recover losses complaint against Nationwide Building Society

Decision detail

Summary

Mr M complained that Nationwide failed to prevent or recover losses from an investment scam where he made over 20 payments totalling £130,000 to a legitimate trading account that was actually controlled by scammers. The scammers subsequently transferred the funds to South Africa. The ombudsman found the scam was unusual in structure and that Nationwide could not have prevented it given the funds went to a legitimate trading firm and Mr M was not forthcoming about his activities. Although Nationwide should have intervened more, a chargeback would not have been successful as the debit card transactions were legitimate transfers to the trading account. The complaint was not upheld.

The Ombudsman's reasoning

The scam was highly unusual as scammers do not typically open legitimate trading accounts in the consumer's name. The funds were sent to a legitimate trading firm, making it highly unlikely Nationwide could have uncovered or prevented the scam unless Mr M had been completely forthcoming. Although Nationwide should have intervened more, given that Mr M was not forthcoming about what he was doing and the funds went to a legitimate trading account, Nationwide could not have prevented the scam. A chargeback would not have been successful as the transactions were legitimate transfers to the trading account; the loss occurred only when funds were subsequently transferred from that account by the scammers.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website