Upheld: Fraud reimbursement (APP scams) complaint against ClearBank Limited

Decision detail

Summary

O, a limited company represented by director Mr S, complained that ClearBank Limited failed to refund money lost to a sophisticated scam. Mr S received a call from a scammer impersonating his other bank, was tricked into approving two card payments totalling around £8,000 to a digital financial services company. ClearBank initially refused to refund, arguing no chargeback rights applied. The ombudsman upheld the complaint, finding ClearBank should have intervened at the second payment, which was rapid, out of character, and brought the total to a concerningly high amount. The ombudsman directed ClearBank to refund the second payment of £3,980 plus interest, finding Mr S was not sufficiently negligent given the scam's sophistication and the stress such calls produce.

The Ombudsman's reasoning

Although Mr S authorised the payments, ClearBank's liability extended beyond chargeback rules. Under Payment Services Regulations, law, regulator's rules, and good industry practice, ClearBank should have monitored accounts for fraud risks and intervened at the second payment. The second payment was rapid, notably out of character, and brought the total to a concerningly high amount. Had ClearBank intervened with reasonable questions, it would most likely have uncovered the scam. Mr S was not sufficiently negligent to share liability given the sophistication of the scam, the credibility lent by the scammer's knowledge and verification methods, and the stress and panic such calls produce. ClearBank bears liability for the loss from the second payment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website