Not upheld: Fraud reimbursement (APP scams) complaint against Starling Bank Limited

Decision detail

Summary

Mr C, a minor, lost over £200 to a scammer who tricked him into buying a cryptocurrency voucher while posing as a gaming goods seller. His parent Miss W funded the payment via Starling debit card, which Starling initially declined but Miss W approved. After the scam was discovered, Miss W requested a refund from Starling. The ombudsman found Starling not liable because the payment was authorised by the customer and parent, the merchant was legitimately registered as a games merchant (not crypto), and banks cannot know what specific items customers purchase. Starling's initial automated decline with parental review was proportionate, and no chargeback or reimbursement scheme applied to this card payment to a legitimate merchant.

The Ombudsman's reasoning

The ombudsman found that Mr C and Miss W authorised the payment, making them liable in the first instance under Payment Services Regulations. Starling could not reasonably have known Mr C was buying a cryptocurrency voucher as banks only see merchant names and categories, not specific purchases. The merchant was legitimately registered as a games merchant. The payment amount, while larger than usual, was not remarkable for a minor buying gaming equipment and was made from a sufficient balance with parental funding and approval. Starling's initial automated decline requiring parental review was proportionate. Post-scam, no chargeback was viable as the merchant provided the voucher as promised, and the scammer was the wrongdoer, not the merchant. No realistic recovery mechanism existed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website