Not upheld: Fraud reimbursement (APP scams) complaint against PayPal UK Ltd

Decision detail

Summary

Mr C complained that PayPal failed to refund disputed transactions resulting from fraud on his account and unfairly reported missed payments to credit reference agencies. PayPal initially declined Mr C's fraud claim but later accepted he was a victim of fraud and refunded all disputed transactions plus interest in October 2025, offering £130 in compensation. Mr C subsequently failed to make minimum payments towards his genuine remaining debt in January, February, and March 2026, leading to late payment fees and adverse credit file entries. The ombudsman found that PayPal acted fairly in reporting the missed payments on genuine debt and that the £130 compensation was sufficient for the distress caused by PayPal's initial errors, with most stress attributable to the fraudsters themselves.

The Ombudsman's reasoning

The ombudsman found that while PayPal initially declined Mr C's fraud claim and caused distress, they ultimately refunded all disputed transactions and associated interest. The key issue was whether missed payment markers on the credit file were fairly reported. The ombudsman concluded that once the disputed transactions were cleared in October 2025, Mr C had a genuine debt obligation and should have made minimum payments. The goodwill offer to clear the balance was made after the January payment was due and Mr C did not accept it, so it could not excuse the missed payments. PayPal had a responsibility to accurately report information to credit agencies, and the ombudsman was satisfied they acted fairly in reporting missed payments on genuine debt. The £130 compensation was deemed sufficient for the distress caused by PayPal's errors, with most stress attributed to the fraudsters themselves.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website