Not upheld: scam refund claim / failure to prevent fraud complaint against Monzo Bank Limited

Decision detail

Summary

Mr S invested in what appears to be an investment scam after discovering the opportunity on social media, meeting an introducer in person, and conducting checks. He transferred £17,500 from savings to his Monzo account, then sent £10,000 and £7,500 to his Limited Company's business account at another provider, from which £14,900 was sent to the investment. After receiving promised returns for 11 months, the payments stopped and Mr S discovered the likely scam. He claimed a refund from Monzo, arguing the bank should have intervened due to the large, consecutive transfers to a new payee. Monzo rejected the claim on the basis that the payments went to an account under Mr S's control and were not covered by the CRM Code. The ombudsman upheld Monzo's decision, finding that while the investment was likely fraudulent, the payment pattern did not present sufficient risk to warrant intervention, particularly given Monzo's knowledge that the destination account was under Mr S's control.

The Ombudsman's reasoning

The ombudsman found that while the investment was likely a scam, the payments themselves did not present sufficient risk indicators to warrant intervention by Monzo. The transactions were large in context but the account was not frequently used, so larger payments would not stand out as much. Critically, Monzo knew the destination account was under Mr S's control (his Limited Company account), which would have reassured the bank the money would be safe and negated risk from it being a new payee. The payments were made 12 hours apart on different days with the second being for a lower amount, not suggesting pressure or escalation. Even if Monzo had intervened, the ombudsman was not satisfied the loss would have been prevented, as the investment had some legitimate-appearing characteristics (reasonable returns, legitimate-looking paperwork, in-person meeting) that would not have triggered sufficient concern during a conversation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website