Not upheld: Fraud reimbursement (APP scams) complaint against Kroo Bank Ltd

Decision detail

Summary

Mr H lost £2,645 to an investment scam perpetrated by someone claiming to be a professional trader between July 2024 and February 2025. Kroo reimbursed only the final two payments (£180 and £20) less a £100 excess under the APP Scam Reimbursement rules that came into force on 7 October 2024, and refused to reimburse earlier payments. The ombudsman upheld Kroo's decision, finding that the individual transaction amounts were not unusual enough to trigger additional intervention, and the pattern of payments to an established payee did not reasonably indicate fraud risk. The ombudsman balanced the need to detect fraud against the disruption that would result from blocking all similar payments.

The Ombudsman's reasoning

The ombudsman applied the APP Scam Reimbursement rules to the final two payments made after 7 October 2024, which Kroo correctly reimbursed less the permitted £100 excess. For earlier payments, while Mr H was a scam victim, this does not automatically require reimbursement. The individual transaction amounts were relatively low and not unusual, and the pattern of payments to an established payee over several months did not reasonably indicate fraud risk. A balance must be struck between identifying potentially fraudulent payments and avoiding disruption to legitimate transactions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website