Not upheld: scam reimbursement / fraud complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Miss A fell victim to a rental scam after finding a property advert on social media and making multiple payments for application fees, deposits, and legal fees to various payees. She realised the scam when unable to view the property despite arranging viewings. Halifax refused to reimburse her losses under the CRM Code, arguing she failed to take reasonable steps to protect herself. The ombudsman upheld Halifax's refusal, finding that Miss A did not have a reasonable basis for believing the rental opportunity was legitimate, given numerous red flags including lack of verification checks, payments made before viewing, inconsistent payee names, suspiciously low rent with unexplained discounts, and absence of written agreements. The ombudsman concluded that reasonable checks would likely have prevented the loss.

The Ombudsman's reasoning

The ombudsman applied the CRM Code framework, which requires reimbursement unless an exception applies. Halifax relied on exception R2(1)(c) - that Miss A made payments without a reasonable basis for believing they were for genuine goods/services or that the person/business was legitimate. The ombudsman found that while Miss A genuinely believed in the legitimacy of the rental, the objective circumstances did not support a reasonable basis for that belief. Multiple red flags existed: no verification checks performed, payments made before viewing, inconsistent payee names, unusual fee structure, suspiciously low rent with unexplained discount, and lack of written agreements. The ombudsman concluded that if Miss A had performed reasonable checks, the scam would likely have been detected and losses prevented.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website