Not upheld: Fraud reimbursement (APP scams) complaint against Robinhood U.K. Ltd

Decision detail

Summary

Mr M complained that Robinhood U.K. Ltd failed to identify that he had become the victim of an investment scam involving pump-and-dump schemes, failed to respond appropriately to his fraud reports, and should reimburse his losses of approximately £11,000. Between May and July 2025, Mr M purchased shares in 'O' based on recommendations from fraudsters impersonating a legitimate investment firm via WhatsApp. The ombudsman found that while Mr M was genuinely deceived by sophisticated fraudsters, Robinhood did not act unfairly or unreasonably because it provided an execution only service where investment decisions remained Mr M's responsibility, and Robinhood lacked knowledge of the fraud before losses occurred. The ombudsman rejected arguments that Robinhood's educational material about pump-and-dump schemes, scam awareness communications, or Consumer Duty obligations required it to intervene in Mr M's trades. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a test of fairness and reasonableness rather than hindsight. While acknowledging Mr M was a victim of fraud, the ombudsman found that Robinhood's execution only business model meant investment decisions remained Mr M's responsibility. The trading activity alone, without knowledge of the WhatsApp fraud, did not reasonably alert Robinhood to the scam. General educational material about pump-and-dump schemes did not alter Robinhood's agreed service model or create an obligation to assess the merits of individual investment decisions. The Consumer Duty, while relevant, applies differently depending on the nature of the service provided, and in the context of an execution only platform where Mr M chose to place the trades, Robinhood did not fall below expected standards. Subsequent trading halts by NASDAQ did not demonstrate Robinhood acted unfairly before those events occurred.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website