Not upheld: scam - failure to prevent or recover fraudulent payment complaint against Starling Bank Limited

Decision detail

Summary

Mr Z complained that Starling Bank Limited failed to prevent him losing £1,306.10 to a travel company scam in March 2026. He made two payments to what he believed was a genuine merchant but later discovered it was fraudulent. Starling refused to reimburse him, and the ombudsman upheld this decision, finding that the payments were not sufficiently unusual or suspicious to warrant intervention by the bank. The account was new with limited activity, the payments did not escalate rapidly, and the values were not concerning. Additionally, a chargeback attempt had no reasonable prospect of success as the payments were made to a legitimate merchant that could demonstrate it provided services as intended.

The Ombudsman's reasoning

The ombudsman found that while Starling should monitor for fraud risks, the payments in this case were not sufficiently unusual or suspicious to warrant intervention. The account was new with limited activity, only two payments were made without rapid escalation, the payment values were not concerning, and payments to new payees are not inherently suspicious. A balance must be struck between identifying fraudulent payments and minimising disruption to legitimate transactions. Additionally, the chargeback had no reasonable prospect of success because the payments were made to a legitimate merchant that could demonstrate it provided the services as intended.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website