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

Decision detail

Summary

Miss H complained that Starling Bank should reimburse £12,150 in payments she made to her boyfriend Mr D between October 2024 and May 2025, claiming she was induced through deception, psychological manipulation and coercive control. Miss H stated the payments were loans for Mr D to repay debts and trade in cryptocurrency, with an agreement he would repay her, but he never did. Starling declined reimbursement as a civil dispute. The ombudsman found the payments did not constitute an APP scam under the Faster Payment Scheme Reimbursement Rules because Miss H intended to pay Mr D and the payments were for the stated purpose of loans, and there was insufficient evidence that Mr D intended to steal the money from the outset given their genuine relationship. Although Starling should have questioned the £5,000 payment, the ombudsman found intervention would not have prevented the loss as Miss H would likely have misrepresented the purpose. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Payment Service Regulations 2017 and the Faster Payment Scheme Reimbursement Rules. Under the PSRs, Miss H authorised the transactions by using her online banking, making them objectively authorised regardless of what she knew. The key question was whether the payments met the definition of an APP scam. An APP scam requires fraudulent or dishonest conduct to manipulate a consumer into transferring funds where the recipient is not who the consumer intended to pay or the payment is not for the intended purpose. Here, Miss H intended to pay Mr D and the payments were for the stated purpose of loans for debt repayment and trading. While Mr D may have misrepresented the reasoning, the ombudsman could not conclude it was more likely than not that Mr D intended to steal the money from the outset, given they were in a genuine eight-month relationship and Mr D appeared to be trading. The ombudsman found Mr D may have failed in his trading or been a victim of a cryptocurrency scam himself. Although Starling should have questioned the £5,000 payment, the ombudsman found Miss H would likely not have provided the true purpose (as evidenced by her previous false statement to Bank M and messages showing Mr D instructing her to misrepresent the payment), and therefore intervention would not have prevented the loss.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website