Not upheld: scam/fraud - liability for authorised payment made under duress complaint against Prepay Technologies Ltd

Decision detail

Summary

Mr T complained that Prepay Technologies Ltd should reimburse him for a card payment of £691.27 made to an overseas bank while he was being coerced by scammers who threatened violence to him and his family. Although Mr T had authorised the payment using strong customer authentication (passcode or biometric), he argued Prepay should have recognised the fraud risk given the wider circumstances of coercion and threats. The ombudsman found that while sympathetic to Mr T's situation, Prepay was not responsible because: (1) Mr T authorised the payment; (2) the transaction was not suspicious in isolation as it matched his stated account purpose of sending money abroad; (3) Prepay could not reasonably have been aware of the coercion circumstances; and (4) a chargeback would not have succeeded given the authorisation. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the legal starting position that account holders are responsible for transactions they authorise. Although Mr T was under duress, he did authorise the payment using strong customer authentication. The ombudsman considered whether Prepay should have detected fraud risk, but concluded the transaction was not suspicious in isolation - it aligned with Mr T's stated account purpose of sending money abroad in foreign currency. The ombudsman found Prepay could not reasonably have been aware of the coercion circumstances and therefore could not have uncovered the scam. A chargeback would not have been successful given Mr T's authorisation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website