Not upheld: APP scam claim / Authorised Push Payment fraud complaint against HSBC UK Bank Plc

Decision detail

Summary

Ms L and Mr E paid a contractor (Mr D) £12,800 for roofing work but the contract was cancelled when they discovered the associated company had been dissolved and costs were increasing. They claimed this was an APP scam and sought reimbursement from HSBC, but HSBC declined, classifying it as a civil dispute. The ombudsman upheld HSBC's decision, finding that whilst concerning factors existed (unpaid subcontractors, dissolved company), there was insufficient evidence of criminal deception to meet the definition of an APP scam under the Faster Payments Scheme Reimbursement Rules. The payments were made to the intended recipient (Mr D) for the stated purpose (roofing work), and some work was completed, making this a contractual dispute rather than fraud.

The Ombudsman's reasoning

The ombudsman applied the Faster Payments Scheme and CHAPS 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 ombudsman found that Ms L and Mr E knowingly paid Mr D directly (not an unintended recipient), and the payments were for the stated purpose of roofing work (even though incomplete). While concerning factors existed (dissolved company, unpaid subcontractors, uncontactable contractor), the ombudsman found insufficient persuasive evidence of criminal deception or intent to defraud. The fact that some work was completed and Mr D's bank reported no concerns meant the matter was more reasonably classified as a civil dispute over incomplete services rather than fraud.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website