Monzo Bank Ltd · DRN-6210020

The complaint Ms N complains that Monzo Bank Ltd (‘Monzo’) declined to reimburse her when she fell victim to a scam. What happened The circumstances of this complaint are well known to both parties, so I will not go into every detail of what happened here. But in summary, Ms N received a call from someone purporting to work for another bank which she had an account with. They said that her account was at risk as fraud had been identified on it. Ms N looked on her online banking to see that a payment of over £1,000 which she did not make appeared as pending. The caller said that she should move her money to a ‘safe account’ to prevent the fraudster from gaining access to it. In line with the caller’s instructions, Ms N moved her funds to her Monzo account, which she already held. They then recommended it would be safer to move the funds into a new account, and so set one up with another financial firm, an ‘electronic money organisation’ (‘EMI’) which I will call ‘R’. Ms N said that the third party seemed to have access to the R account, and the funds which were sent there were quickly spent via Google Pay at various retail stores. When Ms N realised she had fallen victim to a scam, she raised complaints with her bank, Monzo and R who all declined to reimburse her. She was unhappy, so she escalated her concerns to our service where one of our investigators considered all three complaints together. They recommended that each should be upheld, in part. They said that her bank Monzo and R ought to have recognised unusual and out of character behaviour on her accounts by the time a number of payments had gone out, and therefore should have intervened further. They suggested that had they done so, the loss could have been prevented. So, they recommended that all three firms reimburse a portion of Ms N’s losses from a certain point in the sequence of payments. Both her bank and R agreed to reimburse Ms N in line with what our investigator recommended, but Monzo disagreed. As it did not agree, this case has been passed to me to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. In summary, the starting position at law is that a bank like Monzo is expected to process payments and withdrawals that a customer authorises it to make, in accordance with the relevant regulations (in this case the Payment Services Regulations 2017) and the terms and conditions of the customer’s account. In this case, there is no dispute that Ms N authorised the payments from her Monzo account, even though she was tricked into doing so by the scammers. So, the starting position is that Monzo is not liable for the transactions.

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But I’ve also taken into account the law, regulators rules and guidance, relevant codes of practice and what I consider to have been good industry practice at the time. In this case, this does not include the Lending Standards Board Contingent Reimbursement Model (‘CRM’) Code which Monzo had agreed to adhere to the principles of. This is because the funds went to a legitimate EMI account in Ms N’s own name, which is not covered by the Code. But based on the other relevant rules relating to authorised push payment scams, I think Monzo should fairly and reasonably: • Have been monitoring accounts and any payments made or received to counter various risks, including anti-money laundering, countering the financing of terrorism, and preventing fraud and scams. • Have had systems in place to look out for unusual and out of character transactions or other signs that might indicate that its customers were at risk of fraud (amongst other things). This is particularly so given the increase in sophisticated fraud and scams in recent years, which banks are generally more familiar with than the average customer. • In some circumstances, irrespective of the payment channel used, have taken additional steps, or made additional checks, before processing a payment, or in some cases declined to make a payment altogether, to help protect customers from the possibility of financial harm from fraud. So, I consider that as a matter of good practice, Monzo should have been on the lookout for unusual and out of character transactions and where necessary, taken proportionate interventions. Taking these things into account, I need to decide whether Monzo acted fairly and reasonably in its dealings with Ms N. Should Monzo have recognised Ms N was at risk of fraud or financial harm, and if so, at which payment? There were large payments from Ms N’s bank account preceding the payments made from Ms N’s Monzo account, which funded the scam transactions. The payments which left Ms N’s account all went to the R account, on the same date, via Apple Pay and were as follows: 1. 12:14 - £700 2. 12:15 - £725 3. 12:17 - £675 4. 12:23 - £850 5. 12:25 - £950 6. 12:26 - £950 7. 13:32 - £950 8. 13:32 - £925 9. 14:20 - £895 10. 14:21 - £950 Our investigator recommended that Monzo ought to have recognised that the payment was unusual and out of character, such that Ms N may be at risk of financial harm from fraud by the fourth payment. They pointed to the pattern of the payments – incoming payments followed by a quick succession of payments out to an account she had never paid before, albeit in her own name. Monzo have argued that as Ms N was making payments to an account held with a regulated firm and registered in their name, which she did have control of, this mitigated any initial indicators that suggested the activity on her account was unusual. It said it did intervene later due to the increase in payments. I have carefully considered the evidence available to me, including Ms N’s previous account history, and I agree with our investigator that Monzo ought to have recognised that Ms N

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was at risk of financial harm from fraud by the fourth payment. I do appreciate that the values of the transactions, in and of themselves at this point, were not so high that this alone would give cause for Monzo to intervene. However, it is the pattern of payments that ought to have given Monzo cause for concern. I say this because there were four payments for relatively similar amounts made in under ten minutes. This is a pattern more associated with fraud than regular spending, and with the type of transactions which took place on Ms N’s account. I also appreciate that the funds were going to an account in her own name. However, this was not a known and trusted account – Ms N had never paid to it before. Monzo and other financial firms at this time would have been aware of the prevalence of ‘me-to-me’ payments being used as part of a scam. And so when considering the large payments into her Monzo account when followed by a quick succession of payments going out of her account, to a new account, albeit in her name – I think that it ought to have further intervened by communicating directly with Ms N before it allowed this payment to go through. Could Monzo have prevented Ms N’s loss? It appears that it is common ground that intervention could have prevented Ms N’s losses here. Monzo did intervene later in the payment journey when the payments escalated and spoke to Ms N. During this call, Ms N was honest with Monzo about what was going on, and this allowed the scam to be identified and brought to an end. I have no reason to think that a call which took place earlier in the pattern of payments would have provided a different result, and so I think that earlier intervention could have prevented Ms N’s losses from that point. Should Ms N bear some responsibility for her loss? In order to reach a fair and reasonable outcome, I have to think about how any liability should be split between all parties to the complaint – including all three financial firms and Ms N. So, I have to consider what Ms N did and didn’t do around the time of the payments, and whether this means she should share some liability for her loss. Having done so, I agree with our investigator that it would not be fair and reasonable for Ms N to share the liability for her loss. I say this because Ms N believed that she was speaking to her genuine bank and following its instructions. She was able to see the attempted transaction which gave the caller credibility. The tactics used in this kind of scam mean that in the moment a victim is caused to feel anxiety and urgency to move their funds in order to keep them safe. Whilst there may be causes for concern visible with the benefit of hindsight, I have thought about what Ms N understood and did in the moment, and the impact of the scammer’s tactics and techniques in that moment. And in the moment, Ms N genuinely believed that her funds were at risk, and she followed what she thought were her bank’s instructions to quickly take steps to secure those funds from a fraudster. She was not dishonest or misleading to her banks in the process either. So I do not think that it would be fair or reasonable for her to be liable for her loss here. What share of the liability for the loss should Monzo be responsible for? Monzo have argued that equal apportionment of loss between each of the firms involved in this case would not be fair and reasonable in the circumstances of this complaint. It said that each bank had different information available to them about the activity that was occurring. It said that R as the final firm in the payment journeys had much more information than Monzo did about the nature of the payments and the final recipients. However, I have thought about the actions of all parties involved. And in doing so, I have looked at the mistakes made by all three firms and I have found them to be very similar in nature – all three firms should have recognised Ms N was at risk of financial harm from fraud and prevented her loss. Where firms have made the same or similar mistakes, I think it is fair and reasonable to split the

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liability for those mistakes equally. Our investigator has outlined that the payments from each firm did not exactly match up. So, the loss each business is responsible for is not exactly the same here. This is because the point of intervention, and the loss suffered by that point, was not the same for each business – in recognition of the differing payment values, patterns and information available to each business at the time. Our investigator has laid this out in more detail, so I will not repeat all of this here. But, I agree with what was laid out by our investigator with regard to what each firm should pay. As Monzo’s liability is for the largest amount of all three firms, this means it needs to pay one third of the shared portion of the loss, half of some of the loss shared with Ms N’s bank as the firm liable for the second largest portion of the loss, and sole liability for the amount in which neither of the other firms are liable. This totals £2,772. Putting things right In order to put things right, Monzo must: • Reimburse Ms N £2,772 • Pay 8% simple interest from the date of the loss to the date of the settlement. My final decision I uphold this complaint and require Monzo Bank Ltd to reimburse Ms N in line with what I have outlined above. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms N to accept or reject my decision before 21 April 2026. Katherine Jones Ombudsman

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