FOS Issues 50% Refund to Chase Customer Targeted by Scammers

Scam victim Miss P was contacted via text and multiple phone calls by individuals claiming to be from a payment company with which she held an account. They told her that they had noticed some unusual payments between her account with them and her Chase bank account and were calling to rectify the situation.

The callers used fake security checks in a bid to convince Miss P that they were genuine. They also changed the password for her account with the payment company, allowing them to access and control it. Miss P was instructed to transfer all the money in her Chase account to the payment company account to ‘keep it safe’ and was told that it would be returned once the issue was resolved.

Unfortunately, this was all part of the scam. Under the scammers’ instructions, Miss P transferred a total of £27,780 out of her Chase account in just 11 minutes.

Once she realised that she had been scammed, Miss P complained to Chase and was refunded half of the money lost (£13,890). The bank told her it would also pay an extra £75 for distress and inconvenience, but it did not initially make this payment.

Chase also argued that it had sent warning messages to Miss P, but in response, it was argued that these were generic and, on their own, insufficient to ring alarm bells for her.

Miss P was unhappy with Chase’s offer and escalated her complaint to the Financial Ombudsman Service (FOS) for an independent investigation.

The Financial Ombudsman Service is a government-backed body responsible for investigating and resolving disputes between financial institutions (such as banks) and their customers, and it regularly publishes details of its decisions.

The FOS process is two-fold:

1. The initial investigation will be conducted by an investigator who will return a decision and both parties (financial institution and customer) are asked if they accept. If they do, the complaint is settled.
2. If an agreement cannot be reached, the claim will be escalated to an Ombudsman for a final decision. The Ombudsman will review the entire case, including the initial investigation, and their decision is final.

In Miss P’s case, following the initial FOS investigation Chase was instructed to pay interest on the money returned (£13,890), plus the £75 that it had promised for distress and inconvenience but had not yet been paid.

Miss P argued that this was insufficient and that Chase should return the total £27,780 lost, so the case was sent to the Ombudsman. In his final decision, the Ombudsman outlined that banks like Chase should be on the lookout for unusual transactions on customer accounts, stating that “I would have expected [Chase] to check with the customer concerned before proceeding.”

Prior to the scam, Miss P had never made any payments over half the amount of the first of the five, which was just over £5,000. Therefore, five significant transactions of this value over such a short period (less than 15 minutes) should have raised red flags with Chase.

However, the Ombudsman also found that there were some other red flags raised during the scam, which meant that Miss P should also shoulder some responsibility:

• While the scammers ‘spoofed’ the number they called Miss P on, so that it showed the payment company’s real number, they also told her to call them back via a different number. This second number could have easily been checked and proven not to be from the payment company with an online search.
• During the scam, Miss P received a genuine email from the payment company confirming that her password had been changed. As she had not done this herself, it should have indicated to her that something suspicious was going on.
• Contrary to what the scammers told her, there was no evidence that Miss P’s Chase account had actually been compromised, something else that she could have verified independently.

Taking all of this into account, the Ombudsman concluded that the 50% refund, plus interest and £75 for distress and inconvenience, was sufficient compensation for Miss P’s claim.

Miss P’s story is a typical example of an impersonation scam utilising Authorised Push Payment (APP) fraud. APP fraud happens when victims are coaxed or coached into willingly transferring money from their bank account, namely ‘authorising’ the transactions.

Miss P argued that she had not authorised the payments because she was not aware that she was talking to a scammer when she did so. Unfortunately, this is the assumption on which APP fraud is based. Most APP fraud victims authorise the payments as a direct result of lies told to them by scammers impersonating their bank or other trusted organisation such as a utility company or professional, like a solicitor or accountant.

FOS has increasingly found that banks are not taking sufficient steps to detect or stop fraudulent payments as they occur, which is their responsibility as industry experts in the bank-customer relationship.

Sarah Spruce, Head of TLW Solicitors’ scams and fraud team, commented:

“Miss P’s case is a prime example of how easy it can be to be taken in by scammers, especially when they claim to be from trusted organisations. While Miss P ultimately shared some of the responsibility for the money lost, Chase Bank could — and should — have done more to flag, investigate, and stop the unusual transactions on her account.

“If you have found yourself in a similar situation to Miss P, get in touch with my team, who can assess your case and raise a complaint either directly with your bank or, if they refuse to refund, take your case to FOS. It is best to instruct us as early as possible, as we have the experience, prior knowledge, and skills to fight your corner from start to finish.”