Not upheld: Authorised Push Payment (APP) scam - refund claim / fraud allegation complaint against HSBC UK Bank Plc

Decision detail

Summary

Mrs B complained that HSBC should refund £580 she paid to a spiritual psychic (S) whom she believed had scammed her through manipulation and coercion, claiming her children were in spiritual danger to extract payments. HSBC declined the refund, and the ombudsman upheld this decision. Applying the Faster Payments Scheme Reimbursement Rules, the ombudsman found the matter constitutes a private civil dispute rather than an APP scam, as fraud cannot be established on the balance of probabilities. Although S's claims may have been lies, the evidence shows S did provide some spiritual services (mantras and rituals), and it is equally possible S legitimately believed what they told Mrs B. The absence of police investigation, positive reviews of S, and no concerns with the beneficiary account further supported the conclusion that this is a civil matter for resolution through the courts rather than a criminal fraud covered by the Reimbursement Rules.

The Ombudsman's reasoning

The ombudsman applied the Faster Payments Scheme 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 first element did not apply as Mrs B paid the person she intended. For the second element, the ombudsman had to determine whether S set out to defraud Mrs B with criminal deception. Applying the civil standard of proof (balance of probabilities), the ombudsman found insufficient evidence to conclude that fraud is more probable than not. Key factors included: S did provide some services (mantras and rituals); it is equally possible S legitimately believed what they told Mrs B; the beneficiary account showed no typical fraud indicators; positive reviews suggest S may have legitimately served others; and the lack of substantive police investigation suggests insufficient evidence of fraud. The ombudsman concluded this constitutes a private civil dispute regarding the quality or delivery of services, which falls outside the Reimbursement Rules definition of an APP scam.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website