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

Decision detail

Summary

Mrs F complained that Vanquis Bank Limited failed to reimburse a payment of approximately £440 that she made as part of a scam. Although Mrs F was misled into making the payment, the ombudsman found it was authorised under the Payment Services Regulations 2017 because she correctly authenticated and consented to it. The regulations do not provide an exception for payments made under fraudulent circumstances. While the ombudsman found Vanquis made customer service errors in handling the claim, these did not change the outcome. The ombudsman upheld Vanquis's agreement to pay £262 compensation for the service failures rather than the full refund Mrs F sought.

The Ombudsman's reasoning

Under the Payment Services Regulations 2017, a payment is authorised if correctly authenticated and the payer consents. Mrs F completed all required steps and the payment was correctly authenticated, making it an authorised payment despite her being misled by a scam. There is no exception in the regulations for payments made under fraudulent circumstances. Vanquis was not required to have identified the payment as suspicious given it was a single, relatively low-value transaction. A chargeback would have been unlikely to succeed as the merchant provided the relevant service. However, Vanquis made customer service errors in handling the claim that warrant compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website